I would really emphasize what others have–talk to a CPA. Get a referral from someone you know, or just look up some local folks on line. They will most likely be happy to answer questions for half an hour in the hope of getting your business–and you should really consider retaining someone. It’s not expensive, perhaps a couple hundred bucks for federal/State returns, assuming you’re not incorporated and have a pretty straightforward return. If you have a complicated return with lots of schedules, it might cost more but you’ll want expert advice even more.
Beyond knowing tax law itself, a CPA can tell you how the law is being enforced these days–they handle lots of clients so will know if the IRS is taking a hard look at a particular deduction, or where you can be aggressive with deductions. For example, when I was deducting part of my rent, my CPA always warned me that this was a potential red flag for the IRS. I did it anyway, but if you’re more cautious maybe you don’t want to.
Then there’s being incorporated. There’s a LOT to consider there as being a corporation add lots of expenses, but may also save you a lot of money. I won’t even try to explain all that; again, ask a CPA.
ETA, maybe you can take a copy of a recent return and ask the CPA(s) to look and see where you could have saved money. If they point out $500 or more in savings, then you’re probably going to benefit from hiring somebody.
Yes, but there are guidelines, no-nos, and restrictions. One I’m aware of is if you keep your business separate from your personal life, you will have an easier time allocating expenses. This means a separate room for business works well; a corner of a living room, not so much.
Professional help can be worth more than what you pay for it.
The office space deduction was tightened about 15-20 years ago. It used to be you could designate any proportion of your living space as a home office; nowadays you need to have a specific room, and you cannot use the space for anything other than work. Thus, if you use your computer to surf the Internet (other than things that are clearly work related), you can’t deduct the space.
You can deduct the portion of the rent if you can prove that only work is done in that area, but it’s not easy.
A guy I use to know bragged about the home office deduction he was milking years ago. Then he had to relocate suddenly. Because he only owned the house with the office for two years he had to pay all kinds of penalties for the deductions he took.
I don’t think in even the most intense audit the IRS would check your browser history, but I have heard that they will come to inspect “home offices”–only during an audit, of course, but in that case your office probably ought to be a little more credible than a laptop in the rec room.