If you're working from home, your employment status determines whether you can claim the home office deduction on your tax return.
Like millions of other Americans, you may be working from home a lot. Perhaps you're even a full-time remote employee. There are certainly financial advantages to working from home, like saving money on commuting costs, work clothes and lunches. But, on the other hand, there are probably other unreimbursed expenses draining your wallet. For instance, you're probably paying for printer paper and ink, note pads, and other office supplies. Plus, your electric and other utility bills are likely higher since you're at home all day. And maybe you had to upgrade your Wi-Fi, too. Wouldn't it be nice if you could claim a tax deduction for your home office expenses on your next tax return?
Well, maybe you can. Some people can deduct their business-related expenses, and there's something called the "home office deduction" that lets you write off expenses for the business use of your home. Whether or not you can claim these tax breaks depends on your employment status. See if you're one of the fortunate ones who can cut their tax bill or if you're out of luck.
Employees Miss Out
If you're a regular employee working from home, I'm sorry to say that you can't deduct any of your related expenses on your tax return.
Before 2018, you could claim an itemized deduction for unreimbursed business expenses, including expenses for the business use of part of your home if they exceeded 2% of your adjusted gross income. However, this deduction was temporarily suspended by the 2017 tax reform law. It's schedule to go back on the books in 2026 – but we'll have to wait and see if that schedule is changed in any way before then.
Self-Employed People Cash In (Maybe)
If you're self-employed, you may be in luck. Self-employed people can deduct office expenses on Schedule C (Form 1040) whether they work from home or not. This write-off covers office supplies, postage, computers, printers, and all the other ordinary and necessary stuff you need to run an office.
Plus, the home office deduction may also be available if you're self-employed — if you can satisfy all the requirements. This tax break covers expenses for the business use of your home, including mortgage interest, rent, insurance, utilities, repairs, and depreciation. It doesn't matter what type of home you have, either — single family, townhouse, apartment, condo, mobile home, or even a boat. You can also claim the deduction if you worked in an outbuilding on your property, such as an unattached garage, studio, barn, or greenhouse. But you can't claim the home office deduction for any part of your home or property used exclusively as a hotel, motel, inn, or the like.
- For the storage of inventory or product samples; or
- As a daycare facility.
The space must also be used:
- As your principal place of business for your trade or business;
- To meet or deal with your patients, clients, or customers in the normal course of your trade or business; or
- In connection with your trade or business if it's a separate structure that's not attached to your home.
The deduction is claimed on Line 30 of Schedule C (Form 1040). If you use your home for more than one business, file a separate Schedule C for each business. Don't combine your deductions for each business on a single Schedule C.
If you use the actual expense method to calculate the tax break, also complete Form 8829 and file it with the rest of your tax return. If you use more than one home for business, you can file a Form 8829 for each home or use the simplified method for one home and Form 8829 others. Combine all amounts calculated using the simplified method and amounts calculated using Form 8829, and then enter the total on Line 30 of the Schedule C you file for the business.
Employees with a Side Gig?
If you're an employee at a "regular" job, but you also have your own side hustle, you can claim deductions for business expenses and the home office deduction for your own business — if you meet all the requirements. Being an employee doesn't mean you can't also claim the deductions you're entitled to as a self-employed person.
This article was provided by Rocky Mengle, and the editors of Kiplinger Magazine, and brought to you by the Ronald J. Fichera Law Firm, where our mission is to provide trusted, professional legal services and strategic advice to assist our clients in their personal and business matters. Our firm is committed to delivering efficient and cost-effective legal services focusing on communication, responsiveness, and attention to detail. For more information about our services, contact us today!
This is not tax advice and should not be construed as such. Please seek professional tax services for more information and advice that will apply to your specific tax situation.