Can You Deduct a Home Office If You Work Somewhere Else Too?

If you own a business and sometimes work from home, you may qualify for a valuable tax deduction—even if you also work at another location.

Home Office

Many business owners mistakenly believe that having a second office or seeing clients elsewhere disqualifies them from taking the home office deduction. But under IRS rules, that is not the case.

In 2025, you can deduct part of your home expenses if you use a specific space exclusively and regularly to manage your business.

What the IRS Allows

Your home office can qualify as your principal place of business if:

1. You use the space exclusively and regularly for administrative or management tasks, and

2. You do not perform those tasks at any other fixed location.

This applies whether or not you provide services or meet clients elsewhere.

Examples of administrative or management tasks:

• Scheduling

• Invoicing

• Bookkeeping

• Marketing

• Order tracking

• Client communication

If these tasks are handled from a dedicated space in your home, that space may qualify as a deductible home office.

Real-Life Examples of When You Can Deduct a Home Office Even If You Work Somewhere Else

Example 1: Working in Two Locations

A self-employed therapist sees clients at a clinic but manages client files, scheduling, and billing from a home office. That office may qualify as the administrative hub and therefore be deductible.

Example 2: Turning a Commute Into a Deduction

You manage your business from your home office and then drive 24 miles round trip to a secondary worksite. In 2025, the standard mileage rate is $0.67 per mile.

That’s 5,760 miles × $0.67 = $3,859.20 in deductible business mileage.

Example 3: Increasing Business Use of Your Vehicle

If your car was previously used 40% for business, but now you use it 80% because your home is your principal office, you may qualify to deduct more expenses, including depreciation.

Special Rules for S Corporation Owners

If you operate your business as an S corporation, the home office deduction must be handled differently.

You cannot claim the home office deduction on your personal return in the same way a sole proprietor can. That’s because the home office is not your property as far as the business is concerned—it belongs to the corporation.

To take advantage of the deduction, the S corporation must:

• Set up an accountable reimbursement plan

• Reimburse you (the employee-owner) for home office expenses

• Require documentation such as square footage, utility bills, and business-use percentages

Reimbursements under a properly structured plan are:

• Tax-free to you as an employee

• Tax-deductible to the corporation

Without a reimbursement plan, the business cannot deduct the home office, and you cannot deduct it on your individual return.

Legal Background

This rule exists because of a change made by Congress in 1997. Previously, the IRS and the Supreme Court (in Commissioner v. Soliman) denied deductions if the taxpayer performed services outside the home, even if they did administrative work at home.

Congress clarified the law with the Taxpayer Relief Act of 1997, stating that a home used for administrative work could be considered the principal place of business, even if the income-producing work occurs elsewhere.

What You Can Deduct for Home Office

If your home office qualifies, you can deduct a portion of:

• Rent or mortgage interest

• Utilities

• Insurance

• Property taxes

• Repairs and maintenance

• Depreciation (if you own your home)

Two methods are available:

• Simplified Method: $5 per square foot (up to 300 square feet)

• Actual Expense Method: Based on the business-use percentage of your home

Requirements to Qualify

• The space must be used exclusively for business

• It must be used regularly, not occasionally

• You must not perform substantial administrative work elsewhere

• You must maintain basic documentation, including photos, floorplans, and logs

Key Takeaways

• You can deduct a home office even if you work elsewhere

• You must do your administrative work at home

• S corporation owners must use a reimbursement plan

• You may be able to deduct mileage, utilities, and vehicle depreciation

• The rules are clear, but documentation is critical

Need Help?

We can help you:

• Confirm whether your home office qualifies

• Calculate the most beneficial deduction method

• Set up a compliant reimbursement plan for your S corporation

• Organize your documentation for audit protection

Reach out today to schedule a tax planning session and ensure you’re maximizing your deductions under the current tax law.

References:

1. IRS Publication 587, Business Use of Your Home

2. IRS Publication 17, Your Federal Income Tax

3. Taxpayer Relief Act of 1997, Section 942 and IRC §280A

4. IRC Section 280A(c)