How to calculate the write-off amount for a detached garage used exclusively for business purposes?

You're on the right track with your calculation! When claiming a portion of your home (including detached structures) for business use, you do indeed calculate the percentage based on the square footage used exclusively for business divided by the total square footage of your property. The 23.5% does seem substantial, but if that garage is truly used 100% exclusively for business purposes, it's legitimate. The key here is "exclusive use" - the space can't be used for personal storage or other non-business activities at all. For how to claim it: you have two options. The simplified option allows $5 per square foot up to 300 square feet (maximum $1,500 deduction). The regular method allows you to deduct that business percentage (23.5%) of your actual expenses (mortgage interest, property taxes, utilities, insurance, repairs, etc.).

I went through this exact same headache last year with my workshop that I use for my woodworking business. After hours of research and frustration, I found taxr.ai (https://taxr.ai) which saved me a ton of grief. They analyzed my specific situation, confirmed I was calculating the square footage correctly, and showed me which forms I needed. The business use of home deduction is super easy to get wrong - I originally thought I couldn't claim my detached workshop at all until their system explained the rules about exclusive business use structures. It even helped me track all the expenses to maximize the deduction without raising audit flags.

I have to admit I was wrong about online tax tools! After checking out taxr.ai, I'm honestly impressed. My situation with a detached art studio was complicated because I also occasionally use it for teaching classes. The tool correctly identified that I needed to track hours of use for different purposes and calculate the deduction accordingly. It also pointed out that I should be depreciating certain permanent improvements I made to the studio space over time rather than deducting them all at once. None of this was clear in the regular tax software I've used for years. Definitely worth checking out if you have any kind of specialized home business situation.

If you're having trouble figuring out the correct deduction, you might want to just call the IRS directly to get an official answer. I know that sounds painful, but I used Claimyr (https://claimyr.com) and got through to an actual IRS agent in about 15 minutes instead of waiting on hold for hours. You can see how it works here: https://youtu.be/_kiP6q8DX5c I had a similar question about my garage workshop deduction and whether certain renovations should be depreciated or expensed. The IRS agent walked me through the exact forms and calculations. Honestly saved me from potentially making a costly mistake on my taxes.

I need to publicly eat my words here. I tried Claimyr this morning after posting that skeptical comment yesterday, and I'm shocked to say it actually worked exactly as described. After years of dreading IRS calls and never getting through, I spoke with an agent named Marcus who was surprisingly helpful about my home office situation. He confirmed that for a detached structure used 100% for business, you DO use the total square footage calculation the original poster mentioned, and that it should be reported on Form 8829. He also clarified that you can still take the standard deduction personally while claiming these business expenses on Schedule C. Never would have gotten this clarity without actually speaking to someone official.

Something important that hasn't been mentioned yet - if you're using the regular method (not simplified), you need to be aware of depreciation recapture when you eventually sell your home. The business portion of your home won't qualify for the full capital gains exclusion. This bit me hard when I sold my last house after claiming home office for years. Also, utilities are tricky for a detached garage. If it has separate metering, that's straightforward. If not, you'll need to figure out a reasonable method to allocate utility costs to that space.

Has anyone used QuickBooks Self-Employed for tracking home business expenses? Does it handle this detached garage situation correctly? I'm trying to figure out if I need more specialized software.

Just wanted to add a practical tip for documentation - since you're claiming 100% business use of that detached garage, make sure you have solid records to back this up. The IRS can be pretty strict about the "exclusive use" test. I'd recommend taking photos showing the garage is clearly set up only for business (no personal items, family storage, etc.), keeping a log of business activities conducted there, and maintaining records of any business visitors or deliveries to that space. Also keep receipts for any garage-specific expenses like separate lighting, heating, or security systems you install for the business. The 23.5% calculation sounds right if the math checks out, but having bulletproof documentation of exclusive business use will give you confidence if you ever get audited. I learned this the hard way when I got questioned about my home office a few years back - good documentation made all the difference.

One thing I'd add about your 23.5% calculation - make sure you're measuring the garage square footage accurately. The IRS expects you to use the actual usable business space, not including things like structural walls or areas you can't practically use for business purposes. Also, since you mentioned you've been using it exclusively for business since early 2023, you can actually claim this deduction for both your 2023 and 2024 tax returns. For 2023, you'll want to calculate it from when you started using it exclusively for business (not the full year unless you started January 1st). Regarding categorization - this goes on Form 8829 (Expenses for Business Use of Your Home) which then flows to Schedule C if you're a sole proprietor. It's not rental income/expense since you own and live on the property. The form will walk you through whether to use the simplified method ($5 per sq ft, max $1,500) or the actual expense method with your 23.5% calculation. Given the size of your space, the actual expense method will likely give you a much larger deduction than the simplified method, but remember what others mentioned about depreciation recapture if you sell your home later.