I routinely have this argument with clients.  It’s actually a cut-and-dry ruling, but everyone wants to play fast and loose with the rules.

This is not the one to push the envelope!

What constitutes a home office?  (Please note that there are different rules for home health care offices [like physicians], daycare facilities, etc.) 

We just need to rely on the verbiage the IRS spouts in its Publication 587.

 

Your home office will qualify as your principal place of business if you meet the following requirements: 

1. You use it exclusively and regularly for administrative or management activities of your trade or business.
2. You have no other fixed location where you conduct substantial administrative or management activities of your trade or business. 

This short statement above covers some vital facts:

• The administrative office is a “principal” office.
• You must use this office “exclusively” for business.
• You must use this office “regularly” for business.
• You must “do your administrative work” in your home office.
• You must “not do” your administrative work in the office “outside” the home.

 

And, here’s another vital fact- also from this publication.

You can have more than one business location, including your home, for a single trade or business.

The Internal Revenue Service wants these rules to be totally transparent. you may have more than one location for your business, including an office in your home.

Finally, one more fact:

Can I operate MORE than a SINGLE trade or business in the home?

 The IRS is also specific.  The SAME home office can be the principal place of business for two or more separate business activities.  If that is the case, the expenses and costs must be prorated among the businesses.

But, the rule also means there can be two (or more) separate locations in your home for business offices.  Each one must comply with the definitions of the first case- that means the space must be exclusive, regularly employed, with no other place available to us for that business.

Happy Tax Season.