If you work from home, the home office deduction helps reduce the tax bite. It’s an opportunity to convert non-deductible personal expenses to deductible business expenses.

You must work regularly and exclusively out of your home, and have no other office. First, calculate the home office’s square footage—the space devoted exclusively to business—as a percentage of your home’s square footage. (Business storage in spare bedrooms counts too.)

This percentage is applied to prorate home expenses, such as rent, mortgage interest, property taxes and homeowners insurance. (The IRS has denied lawn maintenance, but a new roof is OK.)

If you own your home, you can already deduct 100 percent of mortgage interest and property taxes from personal income tax liability on Schedule A. The only change is that you will move a percentage of those tax deductions to Schedule C. The advantage is that you can now reduce your self-employment taxes as well as income taxes.

The greater benefit is for renters who are unable to deduct rent on Schedule A, but can deduct a percentage under Schedule C. Renters do more than move an existing deduction to another form. They convert a non-deductible expense into a deductible one.

Those expenses specifically associated with dedicated office space, like desks, are direct and 100-percent deductible. But if you have your house interior painted, it is an indirect expense and only a proportionate amount is deductible, based on the home office square footage percentage you calculated.

Caution: If you’re profitable, you can’t use a home office deduction to create a loss or to increase a loss, according to Fred Grant, Intuit® senior tax analyst. Your home office deduction can bring down your profit and loss statement to zero, but not into the red.