The IRS refers to this as the “exclusive use” test.įor instance, a spare room in your home that is only used as your business office can be claimed for the home office deduction. If you do not have a dedicated space for business in your home, you are not allowed to take the home office deduction. The ‘exclusive use’ testīroadly speaking, you must be able to show that a portion of your home is your principal place of business, and that this space is regularly and exclusively used for conducting business. Here’s how your home business can leverage certain tax deductions that may save you money in the long run. As long as they meet the IRS requirements, those who have created a dedicated space for business in their home may be able to claim it as well as some home expenses on their tax returns. Although some businesses have since reverted back to working in the office, many small business owners have found the transition to be efficient and cost-effective, prompting many entrepreneurs to make the virtual shift a permanent change.įor many entrepreneurs, their homes have been reimagined to fit their business needs. While working from home used to a rarity, many businesses have adopted lasting remote or hybrid work policies. Getty Images/ visualspaceĪcross the country, the effects of the coronavirus pandemic have permanently shifted the way many people work. Running a home-based business can offer tax deductions on home repairs in addition to typical business expenses.
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