Home Office

AAA

DEFINITION of 'Home Office'

An office located inside the taxpayer's home that serves as the taxpayer's principal place of business. In order for home office-related expenses such as utilities and mortgage payments to be deductible, the taxpayer must use it as his or her primary place of business. This means that either the majority of the work for the business must be performed there, or clients must be met there on a regular basis.

"Home office" can also refer to the administrative headquarters of a large enterprise, such as the home office of a large corporation that is located in a particular city.

INVESTOPEDIA EXPLAINS 'Home Office'

Taxpayers who use home offices can deduct a proportionate amount of the rent, mortgage, utilities, property taxes and other related expenses that they incur by dividing the square footage of their home office space by the total amount of square footage in their residence. This fraction is then applied to all related expenses to arrive at the dollar amount of deductible expenses.

RELATED TERMS
  1. Physical-Presence Test

    Similar to the bona fide foreign residence test, the physical-presence ...
  2. Principal Place Of Business

    The primary location where a taxpayer's business is performed. ...
  3. Home Office Expense

    Expenses incurred from the operation of a business or the performance ...
  4. Main Home

    A term used by the Internal Revenue Service (IRS) to define the ...
  5. Self-Employed Person

    An independent contractor or sole proprietor who reports income ...
  6. Provisional Patent Application

    A short-term means of protecting an invention that requires less ...
Related Articles
  1. How To Qualify For The Home-Office Tax ...
    Taxes

    How To Qualify For The Home-Office Tax ...

  2. Top 10 Home Business Tax Tips
    Entrepreneurship

    Top 10 Home Business Tax Tips

  3. Top Tax Deductions For Brokers
    Brokers

    Top Tax Deductions For Brokers

  4. Avoid An Audit: 6
    Retirement

    Avoid An Audit: 6 "Red Flags" You Should ...

comments powered by Disqus
Hot Definitions
  1. Halloween Massacre

    Canada's decision to tax all income trusts domiciled in Canada. In October 2006, Canada's minister of finance, Jim Flaherty, ...
  2. Zombies

    Companies that continue to operate even though they are insolvent or near bankruptcy. Zombies often become casualties to ...
  3. Witching Hour

    The last hour of stock trading between 3pm (when the bond market closes) and 4pm EST. Witching hour is typically controlled ...
  4. October Effect

    The theory that stocks tend to decline during the month of October. The October effect is considered mainly to be a psychological ...
  5. Repurchase Agreement - Repo

    A form of short-term borrowing for dealers in government securities.
  6. Correlation

    In the world of finance, a statistical measure of how two securities move in relation to each other. Correlations are used ...
Trading Center