Home Office Deductions for Bloggers

Home Office Deductions for Bloggers

Let’s talk the business of blogging today.  If you are a mom blogger and trying to make some money off of your blog, there is a good chance part of why you want to do that is so you can work at home.  What does that mean?  You might have a home office.  If you are treating your blog as a business, that means you get to take some additional tax deductions.  (Not sure if you are a business or a hobby? I can help you with that.)  One of those deductions to keep in mind is your home office.  Here are the basics you need to know about home office deductions for bloggers.

Home Office Deductions for Bloggers

Does Your Space Qualify

The first thing you need to do is figure out if your work area qualifies as a home office.  Sadly you can’t just decide I work from home, therefore my entire home is my office.  The IRS is pretty specific about what they will and will not allow.  There are two main tests to see if your workspace can get you deductions.  These are if you space is used regularly and exclusively.

Good News!  I know that bloggers have a ton of questions about the tax and business side of running a blog.  It’s a small business after all.

To help out I have a new resource for all things blogging and taxes: SimpleBlogTaxes.com

This site has everything you need to know about filing your taxes as a blogger.  It has easy to understand explanations along with best practices for running your small business.  

Regularly

Do you use this workspace regularly?  (I know, I’m defining it with the word, helpful.) The IRS doesn’t give specifics on what this means, so you need to use your own best judgment.  But basically is this space where you do most of your work?  It can’t be a place where you work once or twice a year, or even just once or twice a month while you normally work somewhere else.  If you are a mom blogger chances are you meet this requirement because, well, you’re at home as it is.

Exclusively

This one is a bit more specific.  Your home office needs to be used for your business only.  It can’t be a guest room you vacate when your in-laws come to visit.  It can’t be the playroom because you work in there sitting on the floor while your kiddos play.  If the space has an alternate use, it is out.  So if you are like me and blog at the kitchen table, or on the couch, or in bed- you can’t deduct that space as a home office.  You would have and utilize that area of your home anyway, so it is not an exclusive business space.

One thing to keep in mind though is that there is no rule saying a home office has to be a certain size to qualify for a deduction.  So if you have a desk that is used solely for your business, you can use the square footage of that desk space to determine your home office deduction.  This means your teens don’t do their homework at the desk and you take over after bedtime, and it can’t be where your spouse catches up on work over the weekend.  If only you use it and it is only for your business, it can count.

Principal Place of Business

One last thing is that your home office needs to be your main place that you work.  This kind of goes along with the regularly rule, and if you are a blogger this usually isn’t an issue.  Bloggers tend to be sole proprietors that don’t have an office outside the home.  But if you have another location where you actively work your business, you can’t take a home office deduction.  Again, bloggers, mom bloggers specifically, tend to work at home.  That’s often the point of the job, so this usually isn’t an issue.

How To Calculate the Deduction

Once you determine if your workspace qualifies or not you need to decide how to calculate your deduction.  There are two methods to determine what your deduction is.  These are the Actual Expenses Method and the Simplified Method.  As you can tell from the name the simplified method is a lot easier to calculate.  Both methods require you to know how big your home office actually is. So you will need to determine the square footage of your workspace.  The Actual Expenses needs the percentage of your home your office space takes up.  Take the square footage you measured and divide it by the square footage of your entire home.  Then multiply that number by 100.  This is the percentage of your home your home office takes up.

Example: Your home is 1000 square feet.  Your workspace takes up 50 square feet.  (50/1000)x100=5.  Your home office is 5% of your home.

Actual Expenses Method

The IRS isn’t super creative in naming, so you can guess that this method requires you to determine the actual amount spent on your home office compared to your home.  In our example, that means 5% of all your expenses need to be calculated.  This means you need to calculate 5% of your mortgage (or rent), home insurance, utilities, etc.  These are your indirect expenses.

You also need to calculate all your direct expenses.  What’s the difference between indirect and direct expenses?  Indirect expenses are things like your utilities, rent, home insurance.  Things that are paid for the entire home, but you use a portion because your workspace is there.  Direct expenses are costs made on your actual workspace.  So if you have to make a repair or you paint your office, that amount can be deducted.

If you use the Actual Expense Method you will need to use a separate form, Form 8829.  There are limits on what you can take as well.  To be honest, if this is the route you are taking you need to talk to your tax professional.  There are a lot of factors at play and it is in your best interest to get help with it.

Simplified Method

The Simplified Method is just that, simplified.  For this one, you need the square footage of your home workspace.  In our example that was 50 square feet.  Take that number and multiply it by $5.  In our example 50x$5= $250.  Your home office deduction is $250.  Much easier, huh.  The one caveat here is that it is limited to home offices that are 300 square feet or less.  If your workspace is bigger than that you cannot use this method.  This deduction can be reported right on your Schedule C.

Limitations

There are of course limitations to home office deductions.  If your business operates at a loss for the year (you lost money, you didn’t make a profit) then you can’t take a home office deduction.  If you opt to use the Simplified Method you cannot also deduct things like mortgage or insurance as a business deduction.  Basically, you can’t double dip.  You pick one method, and that is what you can deduct.

Conclusion

 If you consider your blog to be a business and you have a dedicated home workspace, you need to determine if you qualify for the home office deduction.  These are some basic guidelines to help you out.  But with all things tax-related, you need to talk to your tax professional to answer questions specific to your situation.  I am a bookkeeper, but I am not your bookkeeper.  You are ultimately responsible for your filing decisions.  That being said, if you do have general questions I can definitely try to guide you in the right direction.  Just comment or send me an email and I will do my best to help you out.

If your blog is your business, you need to treat it as such and examine all possible tax deductions when filing.  That’s just smart business.

If you want to read the official explanation for business use of the home, here is Publication 597 from the IRS website: Publication 587: Business Use of the Home

Looking for more blog bookkeeping help?  Check out these posts:

How To Organize Your Blog Bookkeeping

Is My Blog a Business or a Hobby?

15 Tax Deductions for Bloggers