Publication 587 - Business Use Of Your Home - 2002 Page 6
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27can deduct expenses (to the extent of the deduction limit,
Doctors, dentists, attorneys, and other professionals
explained later) for the business use of his home.
who maintain offices in their homes generally will meet this
requirement.
Example 4. Kathleen is employed as a teacher. She is
Using your home for occasional meetings and tele-
required to teach and meet with students at the school and
phone calls will not qualify you to deduct expenses for the
to grade papers and tests. The school provides her with a
business use of your home.
small office where she can work on her lesson plans, grade
The part of your home you use exclusively and regularly
papers and tests, and meet with parents and students. The
to meet patients, clients, or customers does not have to be
school does not require her to work at home.
your principal place of business.
Kathleen prefers to use the office she has set up in her
home and does not use the one provided by the school.
Example. June Quill, a self-employed attorney, works 3
She uses this home office exclusively and regularly for the
days a week in her city office. She works 2 days a week in
administrative duties of her teaching job.
her home office used only for business. She regularly
Kathleen must meet the convenience-of-the- employer
meets clients there. Her home office qualifies for a busi-
test, even if her home qualifies as her principal place of
ness deduction because she meets clients there in the
business for deducting expenses for its use. Her employer
normal course of her business.
provides her with an office and does not require her to work
at home, so she does not meet the convenience-
Separate Structure
of-the-employer test and cannot claim a deduction for the
business use of her home.
You can deduct expenses for a separate free-standing
structure, such as a studio, garage, or barn, if you use it
exclusively and regularly for your business. The structure
More Than One Trade or Business
does not have to be your principal place of business or a
place where you meet patients, clients, or customers.
Whether your home office is the principal place of business
must be determined separately for each trade or business
Example. John Berry operates a floral shop in town. He
activity. One home office may be the principal place of
grows the plants for his shop in a greenhouse behind his
business for more than one activity. However, you will not
home. He uses the greenhouse exclusively and regularly
meet the exclusive use test for any activity unless each
in his business, so he can deduct the expenses for its use,
activity conducted in that office meets all the tests for the
subject to the deduction limit, explained later.
business use of the home deduction.
Example. Tracy White is employed as a teacher. Her
Figuring the Deduction
principal place of work is the school. She also has a mail
order jewelry business. All her work in the jewelry business
is done in her home office and the office is used exclusively
After you determine that you meet the tests under Qualify-
for that business. If she meets all the other tests, she can
ing for a Deduction, you can begin to figure how much you
deduct expenses for business use of her home for the
can deduct. You will need to figure the percentage of your
jewelry business.
home used for business and the limit on the deduction.
If Tracy also uses the office for work related to her
teaching, she would not meet the exclusive use test for the
Business Percentage
jewelry business. As an employee, Tracy must meet the
convenience-of- the-employer test to qualify for the deduc-
To find the business percentage, compare the size of the
tion. She does not meet this test for her work as a teacher,
part of your home that you use for business to your whole
so she cannot claim a deduction for the business use of her
house. Use the resulting percentage to figure the business
home for either activity.
part of the expenses for operating your entire home.
You can use any reasonable method to determine the
Place To Meet Patients, Clients, or
business percentage. The following are two commonly
Customers
used methods for figuring the percentage.
If you meet or deal with patients, clients, or customers in
1) Divide the area (length multiplied by the width) used
your home in the normal course of your business, even
for business by the total area of your home.
though you also carry on business at another location, you
2) If the rooms in your home are all about the same
can deduct your expenses for the part of your home used
size, you can divide the number of rooms used for
exclusively and regularly for business if you meet the
business by the total number of rooms in your home.
following tests.
•
You physically meet with patients, clients, or custom-
Example 1.
ers on your premises.
•
Your office is 240 square feet (12 feet × 20 feet).
•
Their use of your home is substantial and integral to
•
the conduct of your business.
Your home is 1,200 square feet.
Page 6
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