New (and Old) Rules for Home Offices

While simplifying the filing procedure to claim a home office deduction, the IRS criteria for claiming the deduction unfortunately eliminates the
possibility for most ministers. The criteria to claim the deduction isn’t new. If you’re looking ways to save on 2013 taxes, see if these requirements fit your situation:

  1. Exclusive use of the home office for business. To qualify, the room you use for an office cannot be used for any other purpose than business. So, your family members can’t share that space with you for the room to qualify.
  2. Ongoing, as opposed to occasional, use for business. The business conducted in the home office must be the primary place of work for the minister, not a place to fill in at the end of the day.
  3. Convenience for the employer, not the employee. If your church is short of space available for offices, then your home office provides a convenience for the employer and you can qualify for the deduction. However, if you (the employee) simply like to work from home, then it is not considered a convenience for the employer.

Therefore, if you have no other option than to office at home, then you satisfy the criteria for a home office, as long as the room you use is exclusively for your job as a minister and it is used regularly.

Starting in 2013, you can claim a safe harbor computation for your home office deduction as long as you meet the criteria. Instead of multiple calculations for expenses and depreciation, you can claim a flat rate per square foot. The deduction is capped at a maximum 300 square feet x $5 per square foot. You can still claim allowable mortgage interest, real estate taxes, and any casualty losses on Schedule A, and those deductions do not need to be designated as personal vs. business use. So, if you meet the criteria, the simplified calculations make the deduction easily worthwhile.