The ’Reasonable’ Deduction That Triggers the Most Panic — Tax Pros Explain Why
A common tax deduction remote workers look into is for a home office. As noted by TurboTax, someone may qualify for this deduction if they use a portion of their home for business on a regular basis.
One reason this deduction can trigger panic is that there are pretty specific rules from the IRS for claiming it. One such rule is that typically this area you call your home office must be used exclusively for your business.
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If you’re wondering if the deduction is applicable to you and want to avoid a time of panic, read on for what some pros told MoneyLion is good information for taxpayers to know.
The One Word Causing Panic
According to Samy Basta, a certified public accountant (CPA) and the founder of Basta & Company, panic around the home office deduction comes from people misreading “dedicated” when it comes to the home office.
“That's the word that's used loosely in free software, and even some tax guides, and taxpayers hear it as ‘a room I mostly use for work,’” Basta said. “But the IRS has a much more stringent definition. The space must be used regularly for business and the space must be used solely for business, with no personal activity taking place there whatsoever.”
What Taxpayers Need To Know
Phillip Zagotti, a CPA and an attorney at North Star Law Firm, said the simplified method of $5 per square foot and up to 300 square feet, avoids depreciation in the years you use the home office and is often the best choice.
“But it does not erase depreciation you already claimed in prior years,” Zagotti added. “This deduction is only for self-employed people and business owners. The 2025 tax law ended miscellaneous itemized deductions, so most W-2 employees cannot deduct unreimbursed home-office expenses, even if their employer requires them to work remotely.”
Reasons To Worry
Here may be another big reason to panic. Chad Cummings, an attorney and CPA at Cummings & Cummings Law, said he worries less about the deduction causing an audit than what happens after the auditor arrives.
“A bogus home office is the canary in the coal mine telling the IRS exactly where to look next: Mileage, meals, equipment, and every other deduction the taxpayer learned about online from a self-styled ‘guru,’” he added.
Zagotti summarized the home office dedication by saying it’s “genuinely complicated” as you’re allocating real household expenses like insurance, utilities and repairs based on square footage.
“And if you use the regular method, depreciation for the business-use portion of the home can reduce your basis,” he noted. “It may result in taxable gain attributable to that depreciation when you sell. Most people also overestimate the audit risk and underestimate the recordkeeping.”
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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