Claiming home office expenses has historically been quite tricky and is notoriously known for producing higher IRS audit risk; generally speaking, you cannot claim home office expenses if your home is not the place where you regularly carry out your business. If you lease an office space away from home or if your workplace is provided by your employer, you are ineligible for this procedure.

This means that you can only claim home office expenses if you have a separate room within your home dedicated as a home office. The IRS is pretty strict about quantifies a home office; personal possessions that are unrelated to the workplace must be kept outside of the room. Once this is done and your home office set up, you are presented with two options: you may either claim up to 300 square feet at $5 per square foot, or you can opt to report a portion of your expenses, like mortgage interest, rent, and/or utilities, by multiplying the percentage of these statistics that are consumed by the business.

As previously mentioned, claiming home office expenses were often recognized as a red flag to the IRS. However, with working at home being increasingly popular, claiming such expenses have been normalized. Do keep in mind that if you decide to claim home office expenses with Schedule C in your personal tax filing, the likelihood of been audited by the IRS is five times greater.