The home office deduction for Amazon sellers rests on two IRS tests: you must use a specific part of your home regularly and exclusively for the business, and your home must be your principal place of business. Sellers who store inventory at home have a separate route — IRS Publication 587 lets that storage space qualify without the exclusive-use test, as long as five conditions are met. Once a space qualifies, you choose between the simplified method ($5 per square foot, capped at 300 square feet, per the IRS as of data checked 2026-10-08) and the regular method, which uses actual expenses and Form 8829.
This guide covers the IRS criteria only; whether your space qualifies is a fact question for you and your tax preparer. Sources: the IRS Home Office Deduction page, the IRS Simplified Option for Home Office Deduction page, and Publication 587 (2025), which is marked “For use in preparing 2025 Returns” (all data checked 2026-10-08).
The Two Basic Tests for a Home Office Deduction
The IRS home office page states the first requirement plainly: “You must regularly use part of your home exclusively for conducting business.” That one sentence contains two separate tests.
Exclusive use. Publication 587 defines it this way: “To qualify under the exclusive use test, you must use a specific area of your home only for your trade or business.” A spare bedroom that holds your desk, label printer, and shipping supplies — and nothing else — fits the shape of this test. The same room doubling as a guest room on weekends does not, because the area is no longer used only for the business.
Regular use. Publication 587 again: “To qualify under the regular use test, you must use a specific area of your home for business on a regular basis. Incidental or occasional business use is not regular use.” Packing a box at the kitchen table twice a month is the kind of occasional use this sentence excludes.
Principal place of business. The second requirement on the IRS page is: “You must show that you use your home as your principal place of business.” For most online sellers, the relevant path is the administrative-activities rule in Publication 587, which says a home office qualifies as the principal place of business if:
- “You use it exclusively and regularly for administrative or management activities of your trade or business.”
- “You have no other fixed location where you conduct substantial administrative or management activities of your trade or business.”
Listing products, managing PPC, reconciling payouts, and placing supplier orders are the administrative and management work of a typical solo Amazon business.
What counts as “home” is broad. Per Publication 587, “The term ‘home’ includes a house, apartment, condominium, mobile home, boat, or similar property that provides basic living accommodations. It also includes structures on the property, such as an unattached garage, studio, barn, or greenhouse.” A detached garage used as a stock room is inside the definition.
The Inventory-Storage Exception (and What It Does Not Say About FBA)
Inventory is where Amazon sellers differ from most home-based businesses, and Publication 587 has a specific rule for it:
“If you use part of your home for storage of inventory or product samples, you can deduct expenses for the business use of your home without meeting the exclusive use test. However, you must meet all the following tests. You sell products at wholesale or retail as your trade or business. You keep the inventory or product samples in your home for use in your trade or business. Your home is the only fixed location of your trade or business. You use the storage space on a regular basis. The space you use is a separately identifiable space suitable for storage.”
Broken out, the five conditions are:
| # | Publication 587 condition | What to look at in your own setup |
|---|---|---|
| 1 | You sell products at wholesale or retail as your trade or business | Retail selling on Amazon is the activity in question |
| 2 | Inventory or samples are kept in your home for the business | Stock physically sits in the home, not elsewhere |
| 3 | Your home is the only fixed location of your trade or business | No outside office, warehouse lease, or storefront of your own |
| 4 | You use the storage space on a regular basis | Ongoing picking, packing, restocking — not a one-off |
| 5 | The space is separately identifiable and suitable for storage | A defined area (shelving zone, half a basement), not “wherever boxes land” |
The exception waives only the exclusive-use test. Publication 587’s own example shows how far that goes: “Your home is the only fixed location of your business of selling mechanics’ tools at retail. You regularly use half of your basement for storage of inventory and product samples. You sometimes use the area for personal purposes. The expenses for the storage space are deductible even though you do not use this part of your basement exclusively for business.”
The FBA gap. Neither the IRS home office page nor Publication 587 mentions Amazon, FBA, or third-party fulfillment centers. The storage exception is written around inventory kept in your home. Units in an Amazon fulfillment center are not stored in your home, so they do not create a storage space under this rule. Publication 587 also does not say whether a third-party warehouse holding your goods counts as a “fixed location” for condition 3 — a question hybrid sellers (FBM or prep stock at home, the rest at Amazon) should put to a tax professional.
Simplified vs Regular Method: Side-by-Side
Once a space qualifies, the IRS lets you pick a calculation method each year. The IRS simplified-option page says “You may choose to use either the simplified method or the regular method for any taxable year” and “Once you have chosen a method for a taxable year, you cannot later change to the other method for that same year.”
| Item | Simplified method | Regular method |
|---|---|---|
| Rate | “$5 per square foot of home used for business” (IRS, data checked 2026-10-08) | Actual expenses × business-use percentage |
| Area cap | “maximum 300 square feet” | No square-foot cap |
| Maximum deduction | $1,500 (300 × $5) | No fixed dollar cap; limited by business income |
| Expenses used | None tracked — the rate replaces them | Mortgage interest, real estate taxes, insurance, utilities, repairs, depreciation |
| Depreciation | “No depreciation deduction” | Depreciation on the business portion |
| Mortgage interest and taxes | “Allowable home-related itemized deductions claimed in full on Schedule A” | Business share goes into the home office calculation |
| Income limit | “Deduction cannot exceed gross income from business use of home less business expenses.” | Same type of limit, applied in a set order |
| Excess over the limit | “Amount in excess of gross income limitation may not be carried over.” | Excess can carry forward to the next year you use actual expenses |
| Form | Simplified Method Worksheet in the Schedule C instructions | Form 8829 |
Business percentage (regular method). Publication 587 gives two common ways: “Divide the area (length multiplied by the width) used for business by the total area of your home,” or, “If the rooms in your home are all about the same size, you can divide the number of rooms used for business by the total number of rooms in your home.”
Direct vs indirect expenses. Publication 587 separates “Expenses only for the business part of your home” (direct — painting the stock room, for example) from “Expenses for keeping up and running your entire home” (indirect — whole-house utilities, insurance), which are deductible based on the business percentage.
Carryover under the regular method. Publication 587 says that “If your business expenses related to the home are greater than the current year’s limit, you can carry over the excess to the next year in which you use actual expenses.” When the limit applies, deductions are taken in sequence: mortgage interest and real estate taxes first, then operating expenses such as utilities and insurance, then depreciation last.
Switching later. The IRS simplified-option page warns: “If you use the simplified method for one year and use the regular method for any subsequent year, you must calculate the depreciation deduction for the subsequent year using the appropriate optional depreciation table.”
The simplified method trades a capped figure for almost no record-keeping; the regular method can produce more but requires tracking every home expense plus depreciation. Run both each year.
Where Form 8829 and Schedule C Come In
Most US sole-proprietor and single-member-LLC Amazon sellers report business income on Schedule C (Form 1040). Publication 587 ties the home office forms to that schedule:
- Regular method: “If you use your home in a trade or business and you file Schedule C (Form 1040), you will use Form 8829 to figure your deduction.” The IRS home office page describes Form 8829, Expenses for Business Use of Your Home, as “required if you are self-employed and claiming this deduction using the regular method.”
- Simplified method: “If you use your home in a trade or business and you file Schedule C (Form 1040), you will use the Simplified Method Worksheet in your Instructions for Schedule C to figure your deduction.” No Form 8829 is needed.
Either way, the result lands on Schedule C. Because the income limit depends on business income and other business expenses, your FBA bookkeeping has to be right first; see also our accounting software for Amazon sellers comparison.
Multi-member LLCs and S corporations do not file Schedule C, so the Publication 587 sentences above do not describe them; our guide to forming an LLC for Amazon FBA covers how entity choice changes the return you file.
Self-Check: Questions to Bring to Your Tax Preparer
This is not a verdict tool; it is the IRS criteria turned into questions, so your preparer gets the facts in one pass.
| Question | IRS criterion it maps to |
|---|---|
| Is there a specific area used only for the business? | Exclusive use test |
| Is it used on a regular basis, not occasionally? | Regular use test |
| Do you do Seller Central admin and management work there, with no other fixed location where that work is substantially done? | Principal place of business (administrative activities) |
| Is inventory physically stored in the home, in a defined area? | Storage exception, conditions 2 and 5 |
| Is the home the only fixed location of the business? Do you lease any outside space? | Storage exception, condition 3 |
| How many square feet is the business area, and what is the home’s total? | Simplified cap; regular-method business percentage |
| Did you use the simplified method in an earlier year? | Depreciation table rule when switching |
Common Mistakes
- Treating FBA inventory as home storage. The storage exception covers inventory kept in your home. Stock at an Amazon fulfillment center is not in your home, and the IRS publications do not address FBA.
- Assuming the storage exception waives everything. It waives only exclusive use. Regular use, a separately identifiable space, and the “only fixed location” condition still apply.
- Claiming a mixed-use room under the general rule. Outside the storage exception, a room that is also a guest room or family den fails “only for your trade or business.”
- Quoting the simplified rate without the cap. $5 per square foot stops at 300 square feet; a 500-square-foot space does not produce $2,500 under the simplified method.
- Expecting a simplified-method carryover. Under the simplified method, an amount above the income limit “may not be carried over.”
- Deducting mortgage interest twice. Under the simplified method, mortgage interest and real estate taxes stay on Schedule A if you itemize; they are not added to the $5 rate.
- Mixing this up with 1099-K or sales tax. The home office deduction reduces Schedule C profit; it has nothing to do with what Form 1099-K reports or with marketplace sales tax.
Frequently Asked Questions
Can Amazon sellers take the home office deduction?
The IRS criteria do not depend on the sales channel. A seller whose home space meets the regular-and-exclusive-use test and the principal-place-of-business test, or the inventory-storage exception in Publication 587, meets the criteria the IRS lists. Whether a specific space qualifies is a fact question for you and your tax preparer.
Does storing FBA inventory count as using my home for storage?
Only inventory physically kept in your home is covered by the storage exception in Publication 587. Units at an Amazon fulfillment center are not in your home. The IRS home office page and Publication 587 do not mention Amazon or FBA (data checked 2026-10-08).
What is the simplified home office deduction rate?
The IRS simplified option is $5 per square foot of home used for business, with a maximum of 300 square feet (IRS simplified-option page, data checked 2026-10-08). Calculated from the $5 rate and the 300-square-foot cap on that page, that works out to a maximum of $1,500. It cannot exceed gross income from the business use of the home less business expenses.
Do I need Form 8829 as an Amazon seller?
Under Publication 587 (2025), Schedule C filers use Form 8829 when they use the regular (actual expense) method. Schedule C filers who use the simplified method use the Simplified Method Worksheet in the Schedule C instructions instead.
What to Do Next
Measure the space, note what it holds and how often you use it, and match it against the two tests or the five storage conditions above. Then bring that to a preparer — our list of ecommerce accountants for Amazon sellers is a starting point. For the full IRS text, including worked examples beyond what is covered here, read Publication 587.