As a small business owner, you may qualify to take a home office tax deduction (re: IRS Form 8829). In order to qualify for the deduction, the use of your homes office must be both "exclusive" and "regular". Exclusive use means you maintain a separate area of your home (only for your business. This area can be a room or other separately identifiable space. And if you use an area for both personal and business purposes, you are required to pro-rate the total space between personal and business in order to identify the business portion. Regular use means you must use a specific area of your home for business on a continuing basis.

Furthermore, your home office must be both (a) your principal place of business and (b) a place where you meet or deal directly with your business' customers in the normal course of your business.

And finally, whether or not you qualify for the home office deduction, you can still deduct "ordinary and necessary" business expenses that apply specifically to your business, and any "direct expenses" that you incur exclusively for your home office.

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