A sole proprietor can compare actual allocated expenses with the simplified method, generally $5 per square foot for up to 300 square feet, subject to the income limit and other rules. Regular and exclusive use alone is not enough: the office must also satisfy a qualifying business-use test.
A corporate owner-employee generally needs to evaluate an employer reimbursement arrangement rather than assume a personal Schedule C deduction. Keep a floor plan, measurements and records supporting the use and expense allocation.
An example
Hypothetical: a qualifying 200-square-foot office yields a tentative $1,000 simplified deduction before the income limitation. Using a dining table for occasional paperwork does not establish an exclusively used office.
Reviewed October 7, 2026. IRS reference ↗
This is a general reference. Discuss how the rules apply to your business with your tax professional.