Regardless of if you are self-employed or an employee of another business, if you use any part of your home for conducting business, you may be able to deduct certain expenses.
You are not able to deduct expenses incurred for parts of your home that are used for both personal and business reasons. Your home office has to be used exclusively for your business. Also, your home must be the principal place of conducting business. You should perform a majority of business activity and spend most of your time for your business in that portion of your home in order to deduct the expense. Employees are only able to deduct home office expenses if they spend a majority of their business time working from the home, and it is more convenient for their employer.
Taxpayers are able to calculate their deduction though a new, less complicated, safe harbor method. Qualified taxpayers can use a predetermined rate of $5 per square foot up to a maximum of 300 square feet in order to calculate the home business deduction. With the safe harbor method, depreciation is zero, and the deductions is claimed directly on a Schedule C by making two entries relating to the total square footage of the home, and the footage of the office use exclusively. This indicates the use of the safe harbor method.
Employees are required to itemize deductions using a Schedule A of Form 1040, if they chose to deduct business expenses relating to their home.