How do you use the simplified deduction method for a home office?

by Ann
(Sunset Beach, NC)

If you run a business out of your home & use one room exclusively as an office, how do you know how much you will be allowed to use as a deduction? I have read the IRS info on a simplified deduction (, but I don't understand it.

As an example, if your office is 10X10, the square footage would be 100 square feet & you multiply that by $5.00 -- which would be $500.00 If as an example, your total income for the month is $10,000.00 and your expenses are $9,000.00 -- how do you figure what your deduction would be? I have read over the instructions many times & they just aren't clear to me.

I am beginning to help my son with his new business which became an LLC in late 2014. He will have an accountant at the end of the year to determine the deduction for his office.

In the meantime, my son has a partner. My son subtracts his expenses from his gross & writes a check to his partner for 10% of that amount. My question is: how much should I use as a monthly expense for office use? My son has not been including this as an expense before paying the 10% to his partner.

I hope my question is not too jumbled up & difficult to understand. I looked in the questions that have been answered & I didn't see this addressed. Thank you so much for what you do.


Hi Ann!

Sorry it's been a few days since you posted this...there's been a lot going on in my life lately. Anyway...

The way I understand this ruling, is that you take the 100 square feet times the $5 per s.f. and that is your annual deduction for business use of your home. This is instead of calculating a share of the utilities, phone and internet usage for the business. You just use the $500 for the year as a business deduction on the business tax return for home office expense.

Hope that helps!


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Apr 22, 2015
You're welcome!
by: Kathy

That's what I do this for.

Glad I was able to help!

Apr 16, 2015
Thank you
by: Ann


I so appreciate your taking the time to explain this. It is so very helpful as it has been a nagging question in the back of mind. What a great service you offer. Thanks so much.


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