Both the CPA and the IRS Are Wrong on This 2026 Home-Office Audit
By If you are self-employed and also have access to an office elsewhere, you may assume you cannot deduct a home office. Many people believe this, and IRS auditors sometimes raise it. But the law says otherwise, and the IRS’s own guidance backs you up.
Your home office qualifies as your principal place of business when you
- use it exclusively and regularly for administrative or management tasks, such as billing, recordkeeping, and scheduling; and
- have no other fixed location where you conduct substantial administrative or management activities.
IRS Publication 587 confirms that you can have more than one business location, including your home. It also states that having suitable space outside your home does not disqualify you if you choose to do that work at home instead.
You may have heard about the Soliman case, in which an anesthesiologist lost his home-office deduction. Congress overturned that result for tax years beginning after 1998, however, and the IRS now uses this case’s facts as an example of a qualifying home office.
Two points to keep in mind for 2026:
- W-2 employees can no longer deduct a home office, and this change is permanent. If you operate your business as a corporation, have the corporation reimburse your home office so you have a corporate deduction instead.
- For the self-employed, when your home office is your principal place of business, trips from home to other work locations become deductible business mileage rather than commuting.
If you want to discuss the home-office deduction, please call me on my direct line at 408-778-9651.