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My Q4 deduction dropped 40% after that one rule changed in January
I file as a sole proprietor in Denver and my 2023 deduction for home office was $3,200. After the SALT cap changes and that new IRS rule about exclusive use, my 2024 Q4 estimated deduction dropped to $1,900. The main reason was I couldn't claim my second bedroom as a dedicated office anymore since we use it for storage sometimes. I didn't even realize the rules tightened until my accountant flagged it. Did anyone else see a similar drop in their home office deduction this year?
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thomasb412mo ago
My brother in law runs a landscaping business out of his garage in Aurora and got hit hard by that exclusive use thing too. He used to claim half his garage for tool storage and a small desk area, but after the rule change the IRS told him it counts as mixed use if he parks his truck in there overnight. His deduction went from about $2,800 to $1,600 just like that. He's been griping about it every time we grab beers at the Sports Column downtown.
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lisas782mo ago
Wait, that rule applies to garages too? Ugh, good to know.
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charlieh742mo ago
My accountant flagged the same thing back in March when I did my first Q4 estimate. I had been writing off about $2,400 a year for my home office in Lakewood, but the new exclusive use rule cut that to maybe $1,500 because I store my kids' old bikes in the corner of the room. The real killer for me was when I tried to claim a partial deduction for the shared space and got a letter saying it didn't qualify at all. What worked was switching to the simplified method at $5 per square foot up to 300 feet, which got me back to $1,500 without all the paperwork and no hassle about mixed use. Just make sure you measure carefully and keep a quick photo for your records in case they ask.
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