The simplified method trades precision for ease — no expense recordkeeping required — against the actual method, which can produce a larger deduction depending on the specific numbers.
How it works
The simplified method is a flat $5 per square foot of office space, capped at 300 square feet ($1,500 maximum). The actual method applies the office’s share of total home square footage to total home expenses — potentially larger for a bigger office or a costly home, but requires tracking every relevant expense.
What this does not include
The actual expense method also requires the home office to be used regularly and exclusively for business — a strict requirement this calculator’s dollar comparison doesn’t verify eligibility for.
How to use this calculator
- Enter home office square footage, total home square footage, and total annual home expenses.
Frequently asked questions
Can I switch methods from year to year?
Yes — the choice between simplified and actual method can be made annually, allowing a taxpayer to choose whichever gives the better result each year.
Why does the simplified method cap at 300 square feet?
It’s a deliberate simplicity tradeoff — the IRS designed the simplified method to eliminate recordkeeping, and the cap keeps the maximum deduction ($1,500) modest and predictable.
Does the actual method require exclusive business use too?
Yes — both methods require the space be used regularly and exclusively for business; a home office that doubles as a guest room, for instance, generally doesn’t qualify under either method.
