Home Office Deduction

Home Office Deduction - Special Rules for Certain Professionals Who Have a Principal Place of Business Outside the Home

There are special rules related to the Home Office Deduction for those professionals who have a principal place of business outside the home and in addition, conduct services related to that trade or business at their in-home office. This discussion applies to employed doctors, dentists, attorneys and other professionals who maintain offices in their homes.

To qualify for a Home Office Deduction, the employed taxpayer must meet three core requirements. According to the IRS:

You must use part of your home exclusively (a separately identifiable space that cannot be used for both business and personal purposes) and regularly (more than incidental or occasional business use of that specific space) for business;

You physically meet with patients, clients, or customers on your premises and

Your home is substantial and integral to the conduct of your business.

As an employee, any use of your home in connection with your employment must be for the convenience of your employer. In that regard, it may be advisable that the employer and employee have an employment contract requiring the employee to maintain an office in their home, though this is not required. In some cases the employee could enter into a lease with the employer for the home office space. The part of your home you use exclusively and regularly to meet patients, clients, or customers does not have to be your principal place of business.

A word of caution - using your home for occasional meetings and telephone calls will not qualify you to deduct expenses for the business use of your home.

For years 2018 through 2025, the Tax Cuts and Jobs Act did away with this itemize deductions along with all other so called 2% AGI limited deductions. Thus, until Congress changes the law or the TCJA lapse in 2025, the home office deduction can no longer be reported on Schedule A, line 21 and subjected to the 2 percent of adjusted gross income limitation.

If you have any questions, do not hesitate to contact the professionals at Dana S. Beane & Company, PLLC

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