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If you can meet any of the above four criteria you will have no problem proving that you use your home to conduct business and can take the home office deduction. Once you decide to take it, you should be aware of a few rules that can help you substantiate your claim.

Exclusive Use
You must use a room, or portion of a room, exclusively and regularly in one of several business functions in order to take a home office deduction. When the IRS says “exclusively,” it is not kidding. This means that no personal or other non-qualifying work activities may occur in your home office area. If you watch TV in the designated home office area, unless it’s solely for videotape training purposes, remove the television.10 Remove those cookbooks you like from the shelves in your home office work space, and remove the games and other family fun activities out of the area.

To qualify for the home office deduction, you don’t have to use an entire room as your workspace. If you want to use part of a room for business, you can do that. However, there should be some physical separation of the business area from the personal area.11 If you keep your desk, chair, and filing cabinet in your living room, for instance (which is the way many home-based businesses start out), then the square footage those items occupy qualifies for the home office; the rest of the room’s square footage does not. You are not allowed to co-mingle your business and personal furniture. We often hear people wondering if the IRS will really send someone over to their house to see if they are using an exclusive portion of a room for business. Yes, it will. Fortunately, if it plans to send anyone by your house, it will give between four and 12 weeks advance notice. Even with a notice, however, the IRS still manages to nail the unsuspecting taxpayer.

Taken from : Money Mastery “10 Principles That Will Change
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