What this line means
The square footage of the area in your home that you use regularly and exclusively for business. This is not your entire home — it is only the specific space dedicated to your business. A 10-by-12-foot spare bedroom used as your office is 120 square feet. A section of your basement used exclusively for inventory storage is measured the same way. This number feeds directly into your business-use percentage on line 3.
Does this apply to you?
- You have a room or defined area in your home used only for business activities
- You use a detached structure on your property (garage, shed, studio) exclusively for business
- You store inventory or product samples in a specific area of your home on a regular basis
- You use a dedicated space in your home to meet clients or customers in the normal course of business
Easy to overlook
Separate structures count even without the exclusive-use test A detached garage, barn, or studio on your property used for business does not need to meet the “principal place of business” test. If you use the structure regularly and exclusively for business, you qualify — even if you also have another office elsewhere. Filers with outbuildings often skip Form 8829 because they assume the deduction is only for rooms inside the main house. 1 IRS Publication 587 — Business Use of Your Home, Regular Method
You can use any reasonable method to measure The IRS accepts room count as an alternative to square footage if the rooms in your home are roughly equal in size. In a home with 8 rooms of similar size where 1 room is your office, your business percentage is 12.5% (1 divided by 8). This shortcut avoids breaking out a tape measure. 2 IRS Form 8829 instructions — Line 1
Watch out for this
Measuring too generously. Your “office” is the space you actually work in, not the hallway leading to it or the closet where you keep personal items. The IRS can challenge your square footage claim during an audit, and an inflated number raises the business percentage on line 3, which inflates every deduction on the form. Measure the actual floor area of the dedicated workspace and use that number.
Footnotes
-
IRS Publication 587, Business Use of Your Home, Qualifying for a Deduction. https://www.irs.gov/pub/irs-pdf/p587.pdf ↩
-
IRS Form 8829 Instructions, Line 1. https://www.irs.gov/instructions/i8829 ↩