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Can I take a Home Office Deduction as an employee and for my own business?

I'm a 1099 consultant and a W2 employee who works out of my home for both jobs. Can I use the home office deduction for both, or am I limited to only one? If I can take both, where do I enter that?

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TurboTax Specialist

Can I take a Home Office Deduction as an employee and for my own business?

Yes, you may report home office expenses as both Job-Related and for self-employment.

You'll need to divide up the space and enter it as if you had 2 separate offices. The IRS doesn't provide explicit direction on how to do this, stating only that the method you choose be "reasonable."

The most important thing to remember is that the total amount of your home office square footage, when added together, should not exceed the total you would claim if you had just 1 business use.

For example, if you have 2 businesses and 1 office measuring 100 square feet that you use equally for both businesses, you could enter 50 square feet for each home office. Or if you use your home office more for 1 business than the other, you could enter 75 square feet and 25 square feet, respectively.

Here are a few examples of a "reasonable" allocation method:

- One could be based solely on time. For example, if you use your entire office for each of your businesses, using it 60% of the time for 1 business and 40% of the time for another, you could divide the space 60/40.

- Another could be based solely on space. For example, if each business requires special equipment that takes up 50% of the office, you could divide the office 50/50.

- A combination of the above might also work. For example, you might have special equipment for 1 business that uses 50% of your office space. You use the other 50% for both businesses, splitting your time equally. As a result, you would enter 75% of your home office square footage for your first business and 25% for your second business.

Whatever method you choose, when you start entering home office expenses, enter the full amounts you paid during the time you used the space for either office. Do the same on your other office.

It might seem like you're entering everything twice, but since you divided up the square footage earlier based on how you use it, all of the expenses for the total square footage will be accounted for on your tax return.

TurboTax will calculate the correct expense amounts for each office, and the total expense amount will then be correct on your tax return.

 

Here are instructions for reporting your home office in TurboTax: