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How to Calculate the Deduction for an S-Corp Home Office

By Motley Fool Staff – Updated Apr 29, 2025 at 10:54 PM EST

Key Points

S-corporation owners may deduct home-office costs by reimbursing through the company.
To benefit, expenses must be documented and done under fringe-benefit rules.
Deductions are limited by the S corporation's net income; unused can carry forward.

Many taxpayers find the home-office deduction to be one of the scariest provisions in the tax laws because of fears that it will set off audit alarm bells at the IRS. For business owners who set up their businesses as S corporations, the home-office deduction is even more complicated, and many end up concluding that they simply can't take it. By being careful in how you structure the relationship between yourself and your S corporation, there's a way you can benefit from the expenses of having a home office.

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Person sitting at desk in home office. — Image source: Getty Images.

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There's one catch to this treatment: The deduction that the business can take is limited to the net income that the business generates. Therefore, if you have a loss for a given year, then you won't be able to claim the deduction. What you can do, though, is carry it forward to a future year. If you earn a profit in the future, you'll be able to claim it then.

By documenting reimbursements from a corporate bank account to your personal account, you'll be able to establish records to support your position if requested by the IRS. That will make it easier for you to get the tax benefit of your home-office expenses without potentially triggering red flags.

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