What exactly is a home office? According to the IRS, any part of a residence used exclusively to try to make money qualifies for this status. The space must be used for a full-time enterprise or sideline business -- not simply to work on tasks brought home from a full-time job.

And the IRS isn’t snobby. An “office” can be as humble as a desk and file cabinet in the corner of the living room – provided it is a separately defined area used just for business.

Home-office deductions fall into two broad categories – expenses that were used exclusively for your business and those that were common to your entire residence, like the electric bill.

100% DEDUCTIBLE EXPENSES…
Your aerodynamic chair and all furniture – including your desk, file cabinet, shelves, stereo equipment, and decorations.

Tech-related stuff, including your high-speed modem, computer, software, cell phone, fax machine, paper, printer, and cartridges.

Your Web site, including the cost to hire a company to build the business site and host it, and any site-related email services.

Google Ads – and all other printed or electronic advertising and promotional materials.

Credit card interest. While the interest on your family credit card is not deductible, the interest payments on a business card and all other business-related loans are deductible.

Restaurant meals and all other costs to entertain clients, attract business, and earn income.

Flowers, chocolate and other gifts sent to business clients as a thank-you or to recognize significant events.

Your Share of any family vacation is deductible if you conducted business on the trip. Qualifying business activities include attending meetings as well as giving or attending speeches, presentations, and seminars. Deductible expenses include your flight as well as your hotel room and car rental – even if family members were with you.

PARTIALLY DEDUCTIBLE EXPENSES BASED ON THE PERCENTAGE USED FOR BUSINESS PURPOSES…

Your home’s cost. You may deduct part of your rent or take a depreciation deduction if you own your home. The size of your deduction depends on the size of your office space in relation to the rest of the house. For example, if your office occupies 10 percent of your home’s square footage, you may deduct 10 percent of your rent or depreciation.

The cleaning lady. If household cleaning tasks include arranging your home office, provided the maid’s income is reported.

Web connection. If you share an Internet service provider, high speed modem, wireless router, and other Web-based technology with family members, you can deduct that part of the annual bill used by your business.

Oil, natural gas, electric, water, and all other utility costs are deductible but only up to the percentage used by your home office.

Insurance premiums. A percentage of your homeowner’s policy is deductible while all self-employed health insurance policies are 100 percent deductible.

Renovations. If you fix up your house, the portion of the bill devoted to renovating your home-office is deductible. If you and your family must live elsewhere during the renovation, your office in the temporary space is deductible based on how much square footage it occupies.

Miles, If you own a car, keep track of your business-related miles. At year’s end, total them up, multiply by 44.5 cents (in 2006) and add all parking, tolls, and state property taxes paid on the vehicle. The result will be the amount you can deduct the actual operating costs of your business car plus depreciation.