Publication 587: Business Use of Your Home
Publication 587, also known as "Business Use of Your Home," explains how homeowners and renters can claim deductions for the portion of their dwelling used exclusively and regularly for business purposes.
What is Publication 587?
Publication 587, also known as Business Use of Your Home, is an Internal Revenue Service (IRS) resource that guides taxpayers on claiming deductions for expenses related to a home office. It explains eligibility requirements, calculating the deduction amount, and completing relevant tax forms.
What's the purpose of Publication 587?
- Understand the eligibility requirements for claiming the business use of your home deduction.
- Calculate the appropriate portion of expenses attributable to your home office.
- Claim the deduction accurately on your tax return (typically Schedule C or F).
Who can benefit from Publication 587?
- Individuals who run a business out of their home.
- Employees who use a dedicated workspace in their home for their employer's business.
- Daycare providers operating from their residence.
What can you learn from Publication 587?
A. Eligibility: Understand the qualifications for claiming the business use of your home deduction, including the "regular and exclusive use" test and the "principal place of business" test.
B. Calculating the deduction: Learn two methods for calculating the deduction: the regular method (proportioning expenses based on usage) and the simplified method (using a standard mileage rate).
C. Deductible expenses: Discover the allowable expenses you can deduct, such as mortgage interest, real estate taxes, utilities, insurance, and depreciation.
D. Recordkeeping: Learn essential recordkeeping practices to support your deduction claim.