Note that the property tax related to business use of work space in your home has to be claimed as business-use-of-home expenses. You can deduct expenses for telephone and utilities such as gas, oil, electricity, water and cable, if you incurred the expenses to earn income.

How are utilities calculated for a home business?

With the regular method, you calculate your home office deduction by adding up the total actual expenses of maintaining your home office for the year and multiplying it by the percentage of your home’s square footage used for business.

What expenses can I deduct for working from home?

Or you can deduct a portion of your actual expenses (such as mortgage interest or rent, utilities and homeowners insurance, based on the percentage of your home’s square footage that you use as a home office) for the months when you’re working from home.

Can you deduct utilities as a business expense?

Expenses for utilities and services, such as electricity, gas, trash removal, and cleaning services, are primarily personal expenses. However, if you use part of your home for business, you can deduct the business part of these expenses. Generally, the business percentage for utilities is the same as the percentage of your home used for business.

Can you deduct your home office as a business?

Even if your home office and the business expenses associated with that office are otherwise deductible, your deductions may be limited, If your gross business income is less than the total amount of your business deductions, your deduction for certain expenses for the business use of your home is limited.

How to calculate home based business tax deductions?

To obtain this number, divide the square footage of your office space by the total square footage of your home. It is important that these calculations are accurate and that you only deduct the appropriate percentage of each expense. If you do meet IRS guidelines, you can deduct the following home-related expenses: Homeowner’s insurance.

When to use business use of home expenses?

In your next fiscal period, you can use any expense you could not deduct in the current year, as long as you meet one of the two previous conditions. You also use the same rules. To help calculate your business-use-of-home expenses, complete the “Calculation of business-use-of-home expenses” on Form T2125, Part 7.