This is a guest post by Maria Rainier, who is a freelance writer and blog junkie. She is currently a resident blogger at First in Education where she writes about education, online degrees, and what it takes to succeed as a student working towards an online bachelors degree from home. In her spare time, she enjoys square-foot gardening, swimming, and avoiding her laptop.

If you are one of the 40 million Americans who work from home, then there are important rules and regulations you must understand when it comes to home office tax deductions. Whether you are self-employed, a small-business owner, or an employee of a large corporation, understanding what to claim will not only save you a lot of money, it will also benefit you as a professional in your industry as well. 

There are various different terms to what the IRS considers a “home office.” Your home office could mean working in a spare bedroom with nothing but a desk, or it could mean working on a whole floor that is filled with a variety of different communication devices. But ultimately one important factor to remember when it comes to home office tax deductions is that it truly depends on your type of employment.

For instance, if you are an employee and use part of your home to work for your employer, you may be able to qualify for a tax deduction as long as you can prove that it is for the convenience of your employer. But if the employer provides you with an office space yet you choose to work from home, then your home office may not qualify for tax deduction. 

If you are a self-employed mobile professional, for instance, you can deduct costs on your computer, electronics, software, and office furniture. But if you’re a health care professional or you own your own day care, you may be able to claim your cleaning costs, supplies, and even trash collection fees. 

Is your home office your “principal place of business?”

Essentially you must prove that you spend the majority of your time doing business from your home office as oppose to anywhere else, and that you use your home office both exclusively and regularly as your “principal place of business.” Depending on your type of employment, you may also have to prove that your home office is a place where you meet with any clients or customers, for example, if you work as a physical therapist or a tattoo artist. 

However, there are exceptions. If you own a day care, for instance, and you use a room to store inventory, then you may be able to deduct the use of this room as part of your business. Or if you work as a consultant and use your home office to schedule/prepare reports, invoices and appointments, but other members use the same space for recreation and leisure, the space you use may not qualify for tax deduction. Also, if you only use your home office for two months out of the year, you are only allowed claim tax deductions for the two months as opposed to the entire year.

What you can claim

If you work from home, some allowable deductions include utilities, (such as heat, water, and hydro), your phone line, Internet access, and rent. You can also claim various supplies such as a laptop, computer desk, or other types of software needed in order to conduct your business. However, be extra careful not to claim items or costs that aren’t directly related to your home business, such as lawn maintenance. 

It is important to note that there are two separate types of deductible expenses: Direct expenses and indirect expenses. Direct expenses, for instance, are associated with your actual working space, such as office furniture, a business phone line, or even repair costs. Indirect expenses, on the other hand, relate only to your home, such as utilities and mortgage interest, thus they are only partially deductible. 

Understanding home office tax deductions can be a complicating and daunting process, so if you feel intimidating by filing your own taxes, look into hiring an accountant who has experience and training in home office tax deductions.

Bio: Maria Rainier is a freelance writer and blog junkie. She is currently a resident blogger at First in Education where she writes about education, online degrees, and what it takes to succeed as a student working towards an online bachelors degree from home. In her spare time, she enjoys square-foot gardening, swimming, and avoiding her laptop.