This calculator compares the simplified method ($5 a square foot, up to 300 square feet) against a full Form 8829 actual-expense calculation, and applies exactly one allocation to each category of expense.
What this includes
What it excludes
The 2026 rule most people get wrong: internet is not allocated by square footage. A great many calculators — including this one before 2026 — ask for your "business share" of internet, add it to rent and utilities, and then multiply the whole pile by the office's floor area, cutting the internet deduction a second time. Internet and phone have their own business-use percentage, which has nothing to do with how big the room is. Two more that catch people out: the basic charge on the FIRST phone line to a home is never deductible however much it is used for business, and depreciation you claim on a home office is recaptured as taxable gain when you sell — it is not sheltered by the main-home exclusion.
How these figures are calculated · IRS Publication 587 · IRS Form 8829
Each total is the home-office method plus internet and phone, because those are deductible either way — they are ordinary Schedule C expenses, not Form 8829 home-office expenses. The Form 8829 figure on its own is shown below.
A 200 square-foot office in a 2,000 square-foot home — 10% business use — against a range of whole-home annual costs. The simplified figure never moves, because it depends only on the floor area; the actual figure tracks the expenses.
| Whole-home annual costs | Business use | Simplified | Actual | Larger by |
|---|---|---|---|---|
| $12,000 | 10.0% | $1,000 | $1,200 | Actual +$200 |
| $18,000 | 10.0% | $1,000 | $1,800 | Actual +$800 |
| $24,000 | 10.0% | $1,000 | $2,400 | Actual +$1,400 |
| $30,000 | 10.0% | $1,000 | $3,000 | Actual +$2,000 |
| $45,000 | 10.0% | $1,000 | $4,500 | Actual +$3,500 |
| $60,000 | 10.0% | $1,000 | $6,000 | Actual +$5,000 |
The simplified figure for a 200 square-foot office is fixed at $1,000, so the crossover falls where 10% of whole-home costs reaches that — about $10,000of annual rent, utilities, insurance and repairs combined. Every row above is past it, which is the usual position for anyone renting in a city. Adding depreciation would widen the gap further, at the price of recapture when the home is sold — a cost that never shows up in a single year's comparison. The direction reverses for a small office in an inexpensive home, where the simplified method both deducts more and asks for nothing but a tape measure.
The space has to be used regularly and exclusively for business. Exclusively is the strict one: a desk in the corner of a room the family also uses does not qualify, no matter how many hours a week you work at it. The space does not need a wall around it, but it does need to be identifiable and not put to personal use. The two statutory exceptions are a licensed daycare and the storage of inventory or product samples.
Separately, the space must be your principal place of business — or a place where you regularly meet clients or customers, or a separate structure not attached to the home. Administrative and management work done at home qualifies if you have no other fixed location to do it in, which is what brings most consultants and tradespeople inside the rule even though the billable work happens on site.
A direct expense benefits only the office: repainting it, replacing its carpet, fitting a lock on its door. It is deductible at 100%. An indirect expense benefits the whole home — rent, insurance, utilities, a new roof — and is deductible at the business-use percentage. Repairs sit on both sides of the line: fixing the office window is direct, fixing the furnace is indirect, and putting the furnace in the direct box overstates the deduction by a factor of ten in a typical home.
Renters allocate rent and cannot depreciate anything. Homeowners cannot deduct rent they do not pay, and cannot deduct mortgage principal — only the interest, and the property tax, both allocated by area. Homeowners may additionally depreciate the business share of the building's basis, excluding land, over 39 years.
Under IRC § 280A(c)(5) the home-office deduction cannot exceed gross income from the business reduced by the business expenses that are not attributable to the home. In plain terms: it cannot create a loss, or deepen one. A business with $60,000 of gross income and $8,000 of other expenses has a $52,000 ceiling; one with $9,000 of income and $8,000 of other expenses has a $1,000 ceiling, and most of the home-office deduction is disallowed.
What happens to the disallowed part depends entirely on which method you used, and this is the detail most worth knowing. Under the actual method it carries forward to a later year and can be deducted then, if the business has the income and you use the actual method that year. Under the simplified method it is simply lost — there is no carryforward. A business having a thin year can therefore be considerably worse off electing the simpler method, even where the simplified figure looks larger.
Depreciation recapture. Depreciation you claimed — or were entitled to claim — on a home office is recaptured as taxable gain when you sell, and the main-home gain exclusion does not shelter it. Under the simplified method the depreciation deduction for those years is treated as zero, so nothing accrues to be recaptured. That is a genuine long-run advantage of the simpler method which a single-year comparison cannot show.
Educational estimate only — not tax advice. This tool shows the deduction, not what it saves you, and does not verify your eligibility. Confirm with a tax professional before filing.