The home office deduction is real, common and audited less than people fear, provided the space is used exclusively and regularly for business.
The test
A specific area of your home used exclusively (no guest bed, no family computer) and regularly for business, and it is your principal place of business or where you meet clients. A corner of a room counts if it is only used for work.
Simplified method
$5 per square foot, up to 300 square feet, so a maximum of $1,500. No depreciation, no recapture when you sell. Most people should use this.
Actual expenses
Business percentage (office square feet divided by home square feet) of rent or mortgage interest, utilities, insurance, repairs, plus depreciation on the home. Bigger deduction for large offices in expensive homes, with more paperwork (Form 8829) and depreciation recapture on sale.
Recording it
The simplified deduction is a year-end entry, not a transaction. Your preparer adds it. If you use actual expenses, categorize the full household bills as home office and apply the percentage at year end.