In prior years, the “principal place of business” test made it difficult for salespeople, contractors, consultants, etc., to claim a home office deduction. However, a change in the law has made it easier to pass this test. Now your home office is your principal place of business if:
You use the space for administrative and management activities and there is no other location for you to do these activities.
As a result, people who don’t actually work at home may be able to claim home office deductions. Just make sure you set aside a room that you use only for business-related paperwork. Renters can take home office deductions, too. A violinist living in Los Angeles violinist recently won a court battle with the IRS–and got to deduct 40% of her family’s apartment rent.
The violinist convinced the court that nothing else but violin practice took place in the apartment’s living room. The only piece of furniture in the room was used to store her sheet music and the violinist’s young daughter wasn’t allowed to play there.
Because the room was used exclusively for her business (maintaining her skill with the violin), a home office deduction was allowed.
