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The home office: deduct it correctly for your entity type
The short answer
A genuine home office is deductible — the method depends on your entity. Sole proprietors deduct on Schedule C (simplified $5/sq ft, or actual-expense percentage). S-corp owners use a different door entirely: the corporation reimburses the documented costs through an accountable plan. Same office, two rulebooks — using the wrong one forfeits or taints the benefit.
How it works
- Qualify the space: regular and exclusive business use; measure the square footage and photograph it.
- Sole prop: choose simplified vs actual — actual usually wins for offices over ~150 sq ft in high-cost homes.
- S-corp: adopt the accountable plan, submit a quarterly expense report with the home-cost math, reimburse from the business account.
- Keep the bundle: floor plan, cost worksheet, and reports — the whole defense in one folder.
Frequently asked questions
Do I qualify for the home office deduction?
The space must be used regularly and exclusively for business, and be your principal place of business — which includes doing your admin there when you have no other fixed location. A dual-use dining table fails; a dedicated room or clearly delineated space passes.
Simplified or actual-expense method?
Simplified: $5 per square foot up to 300 sq ft — easy, capped at $1,500. Actual: your business-use percentage of rent or home costs, utilities, insurance — usually larger for real offices, with more records.
How does this work if I have an S-corp?
Sole proprietors deduct on Schedule C. S-corp owners should NOT take a home office deduction personally — instead the corporation reimburses the documented costs through an accountable plan.
Does a home office trigger audits?
The exaggerated version did, decades ago. A genuine, documented, exclusive-use office is routine — the risk lives in fiction, not the deduction.
Not sure which method fits?
We run both calculations on your actual costs and set up the accountable plan if the S-corp route applies.
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