Taxpayer asks:

When figuring home office deduction for a separate structure like a garage, do you include the full square footage of the house and the garage or just the garage when it asks for office space?

Taxgirl says:

Assuming that you don’t pay separate utilities, etc., for the garage space, it makes the most sense to include the garage in your total square footage and pro-rate accordingly. For example, if your house was 2000 sq. ft. and your garage – which you were using solely as business/office space – was 500 sq. ft., you would pro-rate it as 500/2500 or 1/5 of utilities, taxes, etc.

That said, to the extent that you can segregate the expenses related to the garage (i.e. separate utility bills), you would want to do that. It’s cleaner and likely more beneficial to you anyway.

Before you go: be sure to read my disclaimer. Remember, I’m a lawyer and we love disclaimers.
If you have a question, here’s how to Ask The Taxgirl.

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Kelly Erb is a tax attorney, tax writer and podcaster.

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