Your home office can be as big or small as you want or need. You are not required to use as small a space as possible. If you like plenty of office space, you can spread out and even use more than one room. But remember, you may use your home office space only for business. You aren't even suppose to use it for personal business, such as writing personal checks.
Although, the IRS probably won't be inspecting your home office, your deductions must still make sense in the event you are audited. If you live in a one-bedroom apartment and claim the entire bedroom as a home office, you'll have to have an answer ready when the IRS asks where you sleep.
In one case, for example, a psychologist who lived in San Francisco claimed a home office deduction for one-quarter of her apartment. However, the entire apartment was a 400-square-foot studio, consisting of an open area(approximately 13 feet by 15 feet) furnished with a desk and a couch, and a small dining area and kitchen (each approximately seven feet by eight feet). Given the layout of this tiny apartment, neither the IRS nor the tax court bought the psychologists claim that she used 100 square feet exclusively for her practice. (Mullin v. Comm'r., TC Memo 2001 -121.) On the other hand, a home based entrepreneur who lived in a studio apartment in Detroit was allowed to take the home office deduction for a walk-in closet he claimed to use exclusively to store corporate books and records. In the case, it was plausible that he used the closet only for business. (Hughes v. Comm'r., TC Memo 1981-140)
Hope you find this information helpful?
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