Can I claim the simplified home office deduction while living rent-free with parents or in military housing?

You can absolutely claim the simplified home office deduction even if you don't pay rent! The key requirements are exactly what you mentioned - the space must be used regularly and exclusively for business, and it must be your principal place of business. The simplified deduction ($5 per square foot, max 300 sq ft) doesn't actually care whether you pay for housing or not. It's designed to be a simple alternative to calculating actual expenses. Since you have a dedicated space that's only used for business, you qualify regardless of whether you're paying rent to your parents. This same principle applies to military housing. The fact that you're not directly paying housing costs doesn't disqualify you from taking the simplified home office deduction.

I had almost the exact same situation last year! I was running my Etsy shop from my sister's spare bedroom and wasn't paying rent. I discovered this awesome tool called taxr.ai (https://taxr.ai) that really helped me figure this out. I just uploaded my documents and answered a few questions about my home office setup, and it confirmed I could take the deduction and calculated exactly how much square footage I could claim. What's cool is that it also showed me other deductions I was missing for my business that I had no idea about! The tool basically looks at your specific situation and gives you personalized tax advice instead of generic info from Google that might not apply to you.

Just wanted to follow up about taxr.ai since I ended up trying it. I was honestly surprised! I've been doing taxes for years with TurboTax but always felt unsure about my home office situation (living in base housing). The tool actually walked me through exactly what qualifies and showed me that I was being too conservative with my deductions. It confirmed exactly what was discussed here - that I CAN take the simplified home office deduction even in military housing where I don't directly pay rent. It also showed me exactly how to document everything in case of an audit, which gave me a lot more confidence. Definitely worth checking out if you're in a non-standard living situation but still running a business.

If you're running into issues with getting clarification from the IRS on this home office deduction question, try using Claimyr (https://claimyr.com). I was stuck in this exact situation last year and couldn't get a straight answer online. Spent HOURS trying to call the IRS directly with no luck. I found this service that actually gets you through to a real IRS agent - you can see how it works here: https://youtu.be/_kiP6q8DX5c. They somehow bypass the hold times (which were literally 3+ hours when I tried). I got connected to a specialist who confirmed that yes, you can take the simplified home office deduction even when not paying rent, as long as the space is exclusively used for business.

Ok I have to eat my words. I tried Claimyr after posting my skeptical comment because I was desperate to resolve an issue with my home office deduction from last year (was living with my parents like OP). It actually worked??? I got through to someone at the IRS in about 20 minutes when I had previously wasted an entire day trying. The agent confirmed everything that's been said here - the simplified home office deduction doesn't require you to be paying rent or a mortgage. It's based on the exclusive business use of the space, not who's paying for it. They even sent me the specific publication that addresses this (Pub 587). Saved me a ton of stress since I was going back and forth on whether I needed to amend my return.

Don't forget that even with the simplified method, you still need to be able to prove that the space is used EXCLUSIVELY for business if you ever get audited. That means no personal use whatsoever in that area. Take pics of your office setup, keep a log of your business activities there, and make sure there's no personal stuff visible (gaming console, TV for watching shows, etc). I had a friend who got audited and lost this deduction because they had a futon in their "office" that they admitted they sometimes used for guests.

So here's a weird question... my bedroom is huge (like 400 sq ft) and I have a clearly defined office area in one corner with my desk, file cabinet, printer, etc that I use ONLY for my business. It's about 80 sq ft. The rest of the room is normal bedroom stuff. Can I claim that specific area, or does the fact that the rest of the room is a bedroom disqualify the whole thing?

Great question! I went through this exact same situation when I was doing freelance graphic design from my parents' house. The good news is that you absolutely CAN claim the simplified home office deduction even when you're not paying rent or mortgage. The IRS Publication 587 is super clear on this - the simplified method ($5 per square foot up to 300 sq ft) is based on exclusive business use of the space, not on whether you're personally responsible for housing costs. As long as your basement corner is used ONLY for business and it's your principal place of business, you qualify. This applies to military housing too. I have a buddy who's stationed overseas and runs a small e-commerce business from his base housing - he takes the simplified deduction without any issues. Just make sure you document everything well (photos of the space, measurements, records showing it's business-only) in case you ever get audited. The exclusive use test is what matters, not who's paying the bills!