To take the deduction, the IRS requires the home office to be your principal place of business and it must be used exclusively and on a regular basis. According to the U.S. Small Business Association, just over half of the country’s small businesses are based in a home, but only a small number of taxpayers claimed the corresponding deduction.
The most common reason for not taking the deduction is the complexity of the paperwork (i.e., IRS Form 8829) taxpayers must file. A second reason for not taking the deduction is fear of an IRS audit, which may also be attributed to the form’s complexity.
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