Working from home in 2025 - How does working from home affect my business deductions?
So I started a remote job earlier this year where I'm working completely from home, but I also run my own side business selling handmade jewelry online. I'm totally confused about the tax situation here. I have this nice home office setup with dual monitors, a decent desk, and a comfy chair that I use for both my 9-5 remote job and then when I'm working on my jewelry business in the evenings and weekends. Since I'm using the same physical space and equipment for both my W-2 job and my self-employed business, can I still claim the home office deduction on my Schedule C? I'm thinking probably not since the space isn't exclusively for my business, but I've never been in this situation before. Does anyone know how this works with the home office deduction when you have both remote W-2 employment and a side business using the same space? Really appreciate any advice!
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Alberto Souchard
You've hit on an important distinction in tax law. For your home office to qualify as a business deduction on Schedule C, it needs to be used "regularly and exclusively" for your business. This is a key IRS requirement. Since you're using the same space for both your remote W-2 job and your jewelry business, you unfortunately can't claim the full home office deduction. The exclusive use test means the area can't be used for both personal activities and your employment. However, you might still have options! You can potentially deduct business-specific supplies and equipment used solely for your jewelry business on Schedule C. Think specialized tools, jewelry-making materials, and any storage space used exclusively for inventory. And if you have any areas of your home that are used exclusively for your jewelry business (maybe a storage closet or part of a room dedicated solely to inventory), you might be able to deduct that specific portion.
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Katherine Shultz
•Wait, I'm confused... what if I'm using my laptop for both my remote job and my photography side business, but I have a specific room that I only use for the photography editing? Can I deduct that room even though I'm using the same computer for both jobs?
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Alberto Souchard
•For the dedicated photography editing room, yes, you could potentially claim that space as a home office deduction since it meets the "exclusive use" requirement - as long as you truly only use that room for your photography business and not for personal activities or your W-2 job. For the laptop, you'd need to track business usage versus personal/W-2 job usage. If the laptop is used for both your W-2 job and photography business, you can only deduct the percentage of use dedicated to your business on Schedule C. You'd need to keep good records showing the business-use percentage (like a log of hours used for each purpose).
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Marcus Marsh
I went through this exact same situation last year with my consulting business and remote job. I was so frustrated trying to figure out what I could deduct that I started using https://taxr.ai to analyze all my receipts and home office situation. It was super helpful because it actually explained which expenses were deductible for my side business vs. my remote job. Their system analyzed my specific scenario and showed me that while I couldn't deduct my entire home office, I could still deduct a portion of certain expenses based on time-of-use allocation between my W-2 job and my business. It also identified business-specific expenses I hadn't even considered claiming! Definitely worth checking out if you're trying to maximize legitimate deductions.
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Hailey O'Leary
•Does the taxr.ai thing actually work with complex situations? Like I have a dedicated space but I sometimes use it for my day job and sometimes for my Etsy business. Can it help figure out what percentage is deductible?
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Cedric Chung
•I'm kinda suspicious of these tax tools... How does it know what's actually allowed by the IRS? Does it just tell you to claim everything and hope you don't get audited?
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Marcus Marsh
•It absolutely works for complex situations like yours. The system asks detailed questions about your usage patterns and can help determine appropriate percentage allocations based on time use. It even offers documentation recommendations to support your claims if you're ever questioned. These tools use actual tax code regulations and IRS guidelines - they're not just guessing. Taxr.ai specifically focuses on helping you claim exactly what you're legally entitled to while avoiding audit flags. It explains the reasoning behind each recommendation and cites the relevant tax provisions, so you understand why something is or isn't deductible.
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Hailey O'Leary
Guys I actually tried taxr.ai after seeing it mentioned here and it was super helpful! It walked me through my whole home office situation and helped me understand exactly what portion of my expenses I could legitimately claim. It turns out I was eligible to deduct about 30% of my home office based on my actual business use vs. my remote job use. The best part was it explained everything in normal human language instead of accountant-speak. It even helped me set up a simple tracking system so I have documentation if I ever get questioned. I've always been nervous about home office deductions but now I feel confident I'm doing it right!
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Talia Klein
If you're still having trouble understanding what you can deduct after using those tools, calling the IRS directly can actually help. But good luck getting through! I spent DAYS trying to reach someone. After like 8 attempts and hours on hold, I found this service called https://claimyr.com that got me connected to an actual IRS agent in about 15 minutes. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c but basically they hold your place in line and call you when an agent is available. The IRS agent I talked to explained exactly what documentation I needed to maintain to properly allocate my home office between my W-2 and self-employed work. Totally worth it for the peace of mind knowing I'm doing things correctly.
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Maxwell St. Laurent
•How does that even work? Do they have some special connection to the IRS or something? I've literally spent hours on hold and eventually just gave up.
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PaulineW
•Sounds like BS to me. Why would the IRS give special access to some random company? I bet they just charge you and then you still wait forever. What's the catch?
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Talia Klein
•They don't have special access - they use technology to automate the calling and holding process. It's like having someone wait on hold for you. They use automatic systems to call repeatedly when needed and navigate the phone menus, then alert you when they've reached an agent. There's no magic backdoor to the IRS - it's just that most people can't spend hours repeatedly calling and waiting on hold. I was skeptical too, but it actually worked. I got connected to a real IRS agent who answered my specific questions about home office allocation between W-2 and self-employment. I was honestly shocked it worked so well after my previous attempts to call them directly.
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PaulineW
Ok I need to admit I was totally wrong about Claimyr. After posting that skeptical comment, I decided to try it myself since I had some questions about my home office deduction that I couldn't find clear answers to online. It actually worked exactly as advertised! I got connected to an IRS representative in about 20 minutes (after spending literally hours trying on my own last month). The agent walked me through exactly how to calculate my deduction when I use my office for both my remote job and my side business. They explained I needed to track hours used for each purpose and calculate the percentage used exclusively for my business. Now I have an official answer I can rely on instead of guessing.
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Annabel Kimball
One thing nobody has mentioned yet - if your employer is REQUIRING you to work from home (like mine is) and provides no office space, that's a different situation than choosing to work remotely. The tax implications are different. My tax guy told me to get documentation from my employer stating that they require me to maintain a home office for my W-2 job.
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Nia Watson
•Wait, does that change how I would handle the deductions? My employer doesn't have an office at all - it's a fully remote company, so technically they are requiring me to work from home. Would that change how I can deduct my office space that I also use for my jewelry business?
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Annabel Kimball
•Unfortunately, even if your employer requires you to work from home, the 2018 tax law changes eliminated the home office deduction for W-2 employees through at least 2025. Only self-employed individuals can claim the home office deduction on their federal taxes. For your jewelry business, you still face the "exclusive use" requirement - which means you can only deduct spaces used exclusively for your business. If you have a dedicated area used solely for making/storing jewelry, that specific area might qualify, but any space used for both your remote job and jewelry business wouldn't qualify.
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Chris Elmeda
Has anyone used the simplified home office deduction for their side business? It's $5 per square foot up to 300 square feet instead of calculating all the actual expenses. Seems easier if you qualify!
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Jean Claude
•I use the simplified method for my Etsy shop and it's so much easier than tracking all those expenses. But remember you still need a space that's EXCLUSIVELY for business use. I converted a small closet (about one-sixth of my apartment's square footage) to store inventory and take product photos, and I only claim that area.
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Charity Cohan
Important point: make sure you're documenting everything in case you get audited. Take photos of your office space, keep receipts for all business purchases, maintain a log of when you use the space for business vs. employment, etc. Trust me, you do NOT want to be scrambling for documentation if the IRS comes knocking!
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