Step-by-step · 3 min read
Home office accountable plan
S corp owners are employees of their own company, so they cannot take the home office deduction directly. Instead, the S corp reimburses them for the office share of home costs under an accountable plan. The company deducts it and the reimbursement is tax-free to you.
- Who it fits
- S corp owners who work from home.
- Figures
- 2026 tax year
The key rule
A written plan, expenses substantiated within about 60 days, and any excess returned within about 120 days.
How it works
An accountable plan has three requirements:
- Business connection. The expenses are for the business.
- Substantiation. You give the company the details and receipts within a reasonable time, generally within 60 days.
- Return of excess. Any advance above what you spent is returned, generally within 120 days.
Meet all three and the reimbursement is not wages. Miss them and it becomes taxable pay.
The same plan can cover your home office, mileage, cell phone and internet, and business costs you pay personally.
4 steps
Adopt a written plan
A short board resolution adopting an accountable plan. We can give you a template.
Calculate the office share
Office square footage divided by home square footage, applied to rent or mortgage interest, property tax, utilities, insurance and repairs.
Submit an expense report
Monthly or quarterly, with the bills attached.
Reimburse from the business
The S corp pays you and books it as an expense.
Example
A typical reimbursement
Your 200-square-foot office is 10% of a 2,000-square-foot home. Rent, utilities and insurance total $60,000 a year. The S corp reimburses $6,000 tax-free and deducts it.
Common mistakes
- Without the written plan, reimbursements may be taxable wages.
- Reimbursing a round number each month with no expense report.
- Including mortgage principal. Only interest, taxes and running costs count.
Key dates
- Monthly or quarterly
- Submit expense reports.
- December 31
- Reimburse the year’s costs before year-end.
Questions we hear
Can the S corp reimburse depreciation on my home?
Yes, if you own the home, the office share of depreciation can be reimbursed. That depreciation is recaptured when you sell.
What about my phone and internet?
The business share can be reimbursed under the same plan.
General education for TaxSquad clients, not advice for your situation. Rules and figures change. Talk to us before acting on this guide.