Let’s look at an example of the regular method.
You live in a 1,000 square foot home where you use 10% or 100 square feet for your home office. You’re eligible to write off 100% of direct expenses but only 10% of indirect expenses because that’s the percentage of your home used for business.
This tax year you spent $500 on office supplies, $2,000 in mortgage interest and $1,500 in utilities. Claim 100% of the office supplies because it’s a direct expense, but only 10% of the others. Using the steps above, your home office deduction would be $850.
You came out ahead by using the regular method because your deduction would only be $500 with the simplified method (100 square feet X $5 = $500).