Under the IRS simplified option, the home office deduction is $5 per square foot of business-use area, on at most 300 square feet — a $1,500 maximum. A 200-square-foot office gives $1,000. The regular method instead applies your business-use percentage to actual expenses: that same office in a 1,500-square-foot home with $18,000 of expenses estimates at $2,400.00.
First, the gate both methods share
Neither method is available just because work happens at home. The IRS requires the space to be used regularly and exclusively for business, and to be your principal place of business, a place where you meet clients in the normal course of business, or a separate structure used for the business — the full criteria are in IRS Publication 587, Business Use of Your Home. Exclusive use is the test most often failed in practice: a desk in a room that doubles as a guest room or family space is not exclusively business space. One more boundary, stated by the IRS on its simplified-option page: an employee working from home cannot claim this deduction at all under current federal law, because the miscellaneous itemized deductions for employee business expenses were eliminated for tax years beginning after 2017. In practice the deduction today belongs to the self-employed and other eligible business filers, who claim it with Schedule C. This calculator figures amounts only; it does not test whether any particular space qualifies.
The simplified option — $5 a square foot, capped
The simplified option, created by Revenue Procedure 2013-13, replaces expense tracking with a prescribed rate: multiply the square feet of the home used for business by $5, counting at most 300 square feet. Three consequences follow directly from the IRS's description of the method. First, the maximum deduction is fixed arithmetic — 300 × $5 = $1,500 — no matter how large the office or how expensive the home. An office of 400 square feet still counts 300. Second, there is no home depreciation deduction under this option, and therefore no depreciation to recapture when the home is sold — the IRS treats depreciation as zero for simplified years. Third, allowable home-related itemized deductions such as mortgage interest and real estate taxes are claimed in full on Schedule A rather than being split between personal and business use. The deduction is claimed directly on Schedule C using a short worksheet in the form's instructions, instead of the regular method's Form 8829. What the simplified option asks in exchange for the small cap is that almost nothing be tracked: the area, and that it qualifies.
The regular method — and why this page's figure is labelled an estimate
The regular method works from actual expenses. Divide the office area by the home's total area to get the business-use percentage — 200 ÷ 1,500 = 13.33% in the worked example — and apply that percentage to the home's indirect expenses: mortgage interest, real estate taxes, rent, utilities, insurance, and whole-home repairs. That percentage-times-expenses core is what this calculator computes, and for many homes it gives a fair first picture of the regular method's size. But it is an estimate, and the page labels it one, because an actual regular-method claim is figured on Form 8829 and the form does more than this page does: expenses that serve only the office and expenses that serve the whole home are treated in separate categories rather than one blended pool; depreciation on the business portion of the home enters the calculation; and the deduction is limited by the income from the business use of the home, with rules for carrying excess amounts forward. None of that is modelled here. Read the regular figure as "roughly this large, before Form 8829's refinements" — which is exactly the comparison the number is for: whether the regular method is plausibly enough larger than $1,500 to be worth its record-keeping in a given situation.
Worked example — 200 sq ft office in a 1,500 sq ft home, $18,000 of expenses
The calculator is pre-filled with exactly this case (mortgage interest + property taxes $12,000, utilities $3,600, insurance $1,800, repairs $600, no rent):
- Simplified: counted area min(200, 300) = 200 sq ft × $5 = $1,000.00
- Business-use percentage: 200 ÷ 1,500 = 13.33%
- Total expenses entered: $12,000 + $3,600 + $1,800 + $600 = $18,000.00
- Regular-method estimate: 13.33% × $18,000.00 = $2,400.00
And the cap, stated once plainly: enter a 400-square-foot office and the simplified side still counts 300 square feet — $1,500.00, the maximum the method allows — while the regular-method percentage keeps rising with the area.
Reading the comparison
The two figures answer different questions. The simplified figure is the deduction itself, complete as computed — subject to eligibility and to the limit that the deduction cannot exceed the income from the business use of the home. The regular figure is the size of a claim whose exact amount only Form 8829 settles. When the estimate lands near or below $1,500, the simplified method's near-zero record-keeping is buying roughly the same dollars. When the estimate lands well above it — large offices in expensive homes are the usual case — the gap is the amount the simplified cap leaves unclaimed, before the form's own adjustments move it in either direction. You may choose either method in any year, per the IRS, by using it on that year's timely filed original return; the choice locks for that year but not for the next. If the estimate here is large, that is the point at which the deduction's real rules — Form 8829, Publication 587, and a tax professional for anything material — take over from a comparison calculator, as does the question of what the deduction is worth once it flows into your overall tax picture on the Self-Employment Tax Estimator and the Quarterly Estimated Tax Calculator.