Many Americans are working from home as a result of the COVID-19 pandemic and asking themselves, “Do I qualify for a home-office deduction?”

The short answer is no if you are a W-2 employee. But if you are a consultant, contractor or otherwise self-employed, you might—if you meet certain requirements:

  • The home office must be used regularly and exclusively to conduct business. An exception to this is if part of the home is used for storage of inventory or product samples or if a residence is used as a daycare facility. If the dedicated part of the home is used for your trade or business but also used to monitor personal investments, it does not qualify.
  • An in-home workspace needs to be the principal place of business if there is more than one business location. Considerations are the time spent at each place where business is conducted (home vs. coffee shop or co-working office space) to meet clients and the relative importance of the business conducted at each location.
  • If you normally meet patients, clients or customers in your home and the use of the home is substantial and integral to conducting your business, you gain flexibility. For instance, a self-employed attorney works three days a week in her city office and two days a week in her home office. She regularly meets clients there. Her home office qualifies for a business deduction because she meets clients there in the normal course of her business.
  • A separate freestanding structure at your home, such as a barn, workshop or garage, may qualify for the home-office deduction if it is used exclusively and regularly for business. For example, an entrepreneur operates a floral shop in town. He grows the plants for his shop in a greenhouse behind his home. He uses the greenhouse exclusively and regularly in his business, so he can deduct the expenses.

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