Definition of home office
: a room in a person's house where he or she does office work
Word by Word Definitions
: one's place of residence : domicile
: the social unit formed by a family living together
: to or at one's place of residence or home (see 1home 1a)
: to a final, closed, or ultimate position
: to or at an ultimate objective (such as a goal or finish line)
: of, relating to, or being a place of residence, place of origin, or base of operations
: prepared, done, or designed for use in a home (see 1home)
: operating or occurring in an area that is a headquarters or base of operations
: to go or return to one's place of residence or origin : to go or return home (see 1home)
: to return accurately to one's native area of place of birth or origin from a distance : to return home
: to proceed or direct attention toward an objective
: a special duty, charge, or position conferred by an exercise of governmental authority and for a public purpose : a position of authority to exercise a public function and to receive whatever emoluments may belong to it
: a position of responsibility or some degree of executive authority
: a prescribed form or service of worship
Financial Definition of HOME OFFICE
What It Is
The term home office has two definitions. First, a company's home office is its headquarters. Second, a home office is a place of business within a person's home.
How It Works
Let's say John Doe is a freelance business writer and editor. His clients are around the world, and he does his work from a desk in a bedroom in his house. This is his home office.
When John does his income taxes every April, he deducts a portion of the expenses associated with maintaining his house, as well as all of his business expenses.
Why It Matters
A home office is more than a desk in a corner. For tax purposes, it is a place of business. Not all home office expenses can be deducted, however. For one thing, the home office must be the taxpayer's primary place of business. If, in John's case, the square footage of his home office is 10% of his whole house, he may be able to deduct 10% of his mortgage, 10% of his utilities, 10% of his alarm system bills, and so on, as well as all of his business expenses. Alternatively, he may take a flat deduction of $1,500 beginning in the 2013 tax year.
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