If you are a business owner in the United States you can deduct a portion of your home expenses from your income tax if you are doing business at home.

However, there are special conditions that you need to satisfy before you can deduct anything.

The surest way is to consult your tax attorney and read the IRS publication 587 "Business Use of Your Home" cover to cover.

But here are some basic questions to ask, provided here for informational purposes only:

• Do you use a part of your home to do business or carry out a trade? If your answer is NO, then there's nothing to deduct from your taxes.

If the answer is YES, ask the second question:

• Are you an employee on a company's payroll?

If the answer is YES:

• Do you work at home because your employer asked you to in order to help the business?

If YES:

• Do you rent the part of your home that you use for business to your employer? If the answer is again YES, forget about the deduction.

However, if the answer is NO:

• Do you use that part of your house "regularly and exclusively" for business? If the answer is NO, again you can't have any deductions since the business use must be "regular and exclusive" according to IRS.

Here are some crucial concepts to understand:

The business use must be "regular and exclusive." That is, if you are using one room for business in the morning but for entertaining your kids in the afternoon, then the use is NOT "regular and exclusive."

The part that you use for business must be your "principal place" of business. There must not be other locations where you conduct that business. For example, you should be meeting your customers, clients, patients, or business associates at your home.

If your home is not your principal place of business and you’re not meeting any customers at your home you can still be eligible for a deduction if the room in question is a separate structure, not connected to your house. Read IRS Publication 587 for details.

You can deduct only that percentage of your home expenses corresponding to the percentage of home space used for business purposes. Here are the two methods used by IRS to figure out the percentage deduction:

1)    Divide the area (length multiplied by width) used for business by the total area of your home.
2)    If the rooms in your home are all about the same size, you can divide the number of rooms used for business by the total number of rooms in your house.

One other thing you should pay attention to is the ramification of the tax deduction on the resale value and market assessment of your home. Consult your attorney and real estate agent to clarify the future implications before taking a deduction.

Ugur Akinci is a small-business owner and writer who owns a number of web properties including http://www.how-to-write-anything.com

NOTE: This article is not written to substitute legal advice. The writer is not a licensed attorney nor does he pretend to be. Always consult with your attorney first before making any legal decisions.