What the IRS says about home office records
IRS Publication 587 says you do not have to use a particular method of recordkeeping, but you should keep records that provide the information needed to figure your deductions for the business use of your home. It says you should keep canceled checks, receipts and other evidence of expenses you paid.
The publication also says your records should show the part of the home used for business, and that you used it exclusively and regularly, either as your principal place of business or as a place to meet clients or customers. On retention, it says to keep records as long as they are important for any tax law, and generally until the later of 3 years after the return due date or filing date, or 2 years after the tax was paid.
This is general information, not tax, legal or financial advice. The home office rules have conditions and limits, so read the linked IRS publication and ask a qualified tax professional about your situation.
Expenses the publication describes
According to Publication 587, the business percentage for utilities is the same as the percentage of your home used for business. If you rent, you multiply your rent payments by that percentage. For insurance, you can deduct the business percentage of the premium covering your tax year, and business-related repairs are also covered, using the business percentage for whole-home repairs such as a furnace.
The publication describes two ways to figure the deduction. Actual expenses require dividing expenses between personal and business use and applying the business percentage, subject to a deduction limit. The simplified method multiplies a prescribed rate of $5 by the area used for qualified business use, limited to 300 square feet, and you cannot deduct depreciation on the business portion under it. It says you choose each tax year whether to use the simplified method.
It describes the business percentage as generally the business area divided by the total area of the home, and says another reasonable method that accurately reflects business use may be used.
Building a home office ledger from statements
Utilities, rent, renters or home insurance and repairs often pass through a bank account, so statement lines are a convenient place to start. Convert the statements, then add a "Home expense" column and a "Business %" cell on a separate sheet. A synthetic example:
Date Description Amount Home expense Business % (example 12%)
03/02/2026 Example Electric Co -140.00 Utilities 16.80
03/05/2026 Example Landlord Rent -1,500.00 Rent 180.00
03/12/2026 Example Insurance Co -85.00 Insurance 10.20
03/20/2026 Example Cable Ltd -70.00 Utilities 8.40Keeping the percentage in one cell means a change flows through every row, and a pivot table can total each type by month. Add a column noting which receipt or bill each line came from, since the publication points to receipts and other evidence rather than statements alone.
Some lines will not be clear from a bank statement. A card payment to a hardware store could be a repair or a personal purchase, and a mortgage payment combines items that the lender statement splits out. The spreadsheet shows what was paid, and you decide with the supporting document how to categorise it. Publication 587 also says you must keep accurate records of expenses when deciding between repairs and improvements.
Keep the originals
A spreadsheet is a working summary. We are not claiming it satisfies any requirement, so keep the original statements, bills and receipts, and the records of your home that Publication 587 describes, such as documents showing when and how you acquired it and any improvements. The publication also points to Publication 583 for more on recordkeeping. PDFtoRow can convert your statement PDFs to Excel or CSV to start the ledger.
Convert Bank Statement PDFs Cleanly with PDFtoRow
Tired of fixing broken columns, corrupted dates, and numbers stored as text? PDFtoRow extracts transaction tables directly from digital PDF vector layers, preserving check numbers and outputting true numeric amounts. Statements up to 5 pages are free once per email every 24 hours. Check the 10-row preview before you download.
Frequently Asked Questions
Publication 587 says you do not have to use a particular method, but you should keep records that provide the information needed to figure your deductions, including canceled checks, receipts and other evidence of expenses you paid.
According to Publication 587, the simplified method multiplies $5, the prescribed rate, by the area of your home used for a qualified business use, and the area is limited to 300 square feet. Check the current publication for any changes.
Publication 587 says the business percentage for utilities is the same as the percentage of your home used for business, generally the business area divided by the total area, or another reasonable method that accurately reflects business use.
Primary Evidence & Official References
- Publication 587, Business Use of Your Home — irs.gov (Verified 2026-10-29). Official source documentation →
- Publication 583, Starting a Business and Keeping Records — irs.gov (Verified 2026-10-29). Official source documentation →