Generally, you cannot deduct personal, living, or family expenses. However, if you have an expense for something that is used partly for business and partly for personal purposes, divide the total cost between the business and personal parts. You can deduct as a business expense only the business part.
Business Use of Your Home
If you use part of your home in your business, you may be able to claim part of the expenses of maintaining your home as a business expense. These expenses include mortgage interest, insurance, utilities, repairs, and depreciation.
The business use of your home must meet specific requirements before you can take any of these expenses as business deductions.
To qualify to claim expenses for the business use of your home, the business part of your home must be used exclusively and regularly for your trade or business.
The business part of your home must be one of the following:
Your principal place of business
A place where you meet or deal with patients, clients, or customers in the normal course of your trade or business.
A separate structure (not attached to your home) you use in connection with your trade or business.
You do not have to meet the exclusive use test for the part of your home that you regularly use in either of the following ways:
- For the storage of inventory or product samples
- As a day-care facility
Your home office qualifies as your principal place of business if you meet the following requirements:
You use the office exclusively and regularly for administrative or management activities of your trade or business
You have no other fixed location where you conduct substantial administrative or management activities of your trade or business
Business Use of Your Car
You can deduct the actual expenses of operating your car or truck ro take the standard mileage rate. You must use actual expenses if you used your vehicle for hire (such as a taxicab) or you used five or more vehicles simultaneously in your business (such as fleet operations). You cannot use actual expenses for a leased vehicle if you previously used the standard mileage rate for that vehicle.
You can take the standard mileage rate only if you:
Owned the vehicle and used the standard mileage rate for the first year you placed the vehicle in service, or
Leased the vehicle and are using the standard mileage rate for the entire lease period (except the period, if any, before 1998).