Home Office Deduction Calculator
Compare the IRS Simplified method and the Actual Expense method side by side. Enter your numbers below — we’ll show you which one gives you the bigger deduction this tax year.
Your Numbers
The living area of your entire home (exclude garages, unfinished basements).
Must be used regularly and exclusively for business.
Interest only, not principal. Found on Form 1098.
Electricity, gas, water, trash. Not phone or internet — those go elsewhere.
Your Schedule C profit before applying the home office deduction. The deduction can’t exceed this number.
Your Deduction
If you run a business from home and you’re self-employed, the IRS lets you deduct part of your housing costs. You’ve got two ways to do the math: the Simplified method and the Actual Expense method. One is fast. The other usually saves more money. This calculator shows you both side by side and tells you which one wins for your specific numbers.
A few things to know before you start. W-2 employees can’t claim this deduction, even if you work from home full time. That changed with the 2017 tax law. The home office deduction is only for people who file Schedule C (sole proprietors, single-member LLCs) or a similar business return. Your home office also has to be used regularly and exclusively for business. If your kitchen table doubles as your workspace and your dinner table, it doesn’t qualify.
The Simplified Method: Fast and Clean
This one is easy. Measure your home office in square feet. Multiply by $5. That’s your deduction. The cap is 300 square feet, so the most you can claim this way is $1,500.
A 150-square-foot office gets you $750. A 200-square-foot office gets you $1,000. A 400-square-foot office still only gets you $1,500, because the cap kicks in regardless of how big your office actually is.
No receipts, no allocation math, no depreciation. You declare the square footage and move on. Most people use this if their office is small or their home expenses are low.
The Actual Expense Method: More Work, Often Bigger
This takes more effort but often produces a larger deduction. First you figure out what percentage of your home is your office. A 200-square-foot office in a 2,000-square-foot home is 10%. Then you apply that 10% to your real home expenses: mortgage interest, property tax, insurance, utilities, and repairs. If you rent, you swap mortgage interest and property tax for your annual rent.
Here’s what that looks like in numbers. Say you paid $12,000 in mortgage interest, $4,800 in property tax, $1,500 in insurance, $3,600 in utilities, and $1,200 in repairs. That’s $23,100 in eligible expenses. Ten percent of that is $2,310. The Simplified method on the same office would give you $1,000. So the Actual method is worth $1,310 more this year.
The tradeoff is recordkeeping. You need receipts, utility bills, and mortgage statements. If the IRS ever looks closely at your return, you have to back up every number.
Which Method Should You Pick
Run the numbers both ways in the calculator above, then weigh these three things.
If the Actual method wins by a lot, go Actual. An extra $1,000 or more in deductions is worth the paperwork.
If the two methods are within $200 of each other, take the Simplified. The time you save is worth more than the small difference.
If you own your home and plan to sell within the next 10 years, be careful with the Actual method. The Actual method technically lets you claim depreciation on the business portion of your home. When you sell, that depreciation gets taxed back as ordinary income. The IRS calls this depreciation recapture. Talk to a CPA before you choose Actual if a sale is on your radar. The Simplified method skips depreciation entirely, so there’s nothing to recapture later.
Two More Things to Know
Your home office deduction can’t exceed your business income. If your business made $3,000 this year and your calculated deduction is $5,000, you can only deduct $3,000. The leftover $2,000 carries forward to next year, but only if you used the Actual method.
And the home office deduction is one of those tax items the IRS watches. Measure your office accurately. Keep your records. Don’t round up. Millions of self-employed people take this deduction every year without any issue, but sloppy math is how you turn a legitimate deduction into an audit letter.