Home Office Deduction: Simplified vs. Actual Method
In short: Under the IRS simplified method, a US freelancer deducts $5 per square foot of home office, up to 300 square feet, for a maximum of $1,500 per year. The actual expense method deducts the office's percentage of housing costs such as rent or mortgage interest, utilities and insurance, and often produces a bigger deduction. Either way, the space must be used regularly and exclusively for business.
Read MoreSchedule C Expense Categories, Explained Line by Line
In short: Schedule C (Form 1040) is where US sole proprietors and single-member LLCs report business income and expenses to the IRS. Expenses go on fixed numbered lines such as advertising, car and truck expenses, contract labor, office expense, supplies, travel and meals, and the net profit left over is what income tax and self-employment tax are calculated on. A home office has its own separate calculation.
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