It is very essential to understand the difference between the home office deduction you are entitled and that deduction you are not entitled too. Before filing the federal tax return, you should know the clear distinction between these two.

First rule is very clear; you have to use a room in your home just for running your business only. If you are using the space as the office in the day time and use the space for family purposes for the rest of the time you are not entitled for the federal tax reduction. In simple terms this simply means it must be used only by you only and also only for business purposes.

Generally you can claim the deduction for the area in which the computer is placed, say a space of 6′ x 4′ or 5′ x 5′, if you use the computer no other purposes than office use. It should not be the case that you use it for kid’s games, hearing music and chatting online.

Also note only one per household can claim the deduction, if both you and your spouse run business from same home. Both can claim only if you have separate rooms in your home. Unfortunately, this is possible only if the home have enough space.

Calculation is simple

If you have a 200 sq. ft dens in a 2000 sq. ft house and if 20 sq. ft of it is only used, then you can claim as a deduction equivalent to 1% of all the home expenses. The calculation is simple 20 sq ft makes 1% of total house area of 2000 sq. ft.

Mostly IRS requests you to produce documentation about the circumstance that you have shifted to some other area during the year, it is better to keep a stamp sized photograph of your home office space. In case if you move to some other place, you require different documentation for claiming the deduction.

If you are working in an outsourcing project from home, you can claim the deduction if you could produce evidence to show that you are not working in the employers office or facility.

IRS will not consider the home phone expenses as part of the deductions, as the home phone is assumed to be for home personal purposes and not for official use. So if you more work which requires internet connection and hence brings more phone charges, it is better to go for a separate line so that you can claim the full deduction. The cost of facilities such as 1-800 number or call waiting to the home phone line can be claimed.

Before starting with IRS 8829, the best option for you is to consult a qualified and experienced tax professional to find out best ways to get Home office deduction.