Working Remotely from Doesn’t Mean a Home Office Deduction
As companies have scrambled to deal with the pandemic, many have arranged to have their employees work from home. But if you’re working from home, don’t expect a home office deduction for remote workers.
No Deduction for Employees
Prior to 2017, employees working from home for the convenience of their employers could deduct some of their costs on their tax returns. But the Tax Cut and Jobs Act passed that year did away with the home office deduction for remote workers.
But look on the bright side of working from home. You save on commuting costs, lunches out, and work wardrobe. At least the wardrobe from the waist down.
Some Good News
Your home workspace might need a boost in order to become a proper office for you. You might need more powerful Internet, for example. Or you may need a new printer.
The good news is your employer can pay for these items, and you won’t have to pay taxes on them. And that’s true even if you have some personal use – it’s considered an insignificant fringe benefit for employees. Similarly, if you pay for these items and get reimbursed, that’s not taxable either.
If your boss needs convincing, tell them that paying for your home office needs is deductible for the company. The purchases just need to be “ordinary and necessary” for the business.
Who Does Get the Home Office Deduction?
The home office deduction is still available to self-employed workers. For example, independent contractors or side-gig workers. You can take advantage of the deduction if you use a dedicated space exclusively for work. Among other things, you can expense a portion of your rent or mortgage, utilities, and cell phone bill. You can also deduct the cost of repairs and maintenance for your workspace.
Links
This IRS has an updated reminder of the rules for the home office deduction.
Check out our blog post on who is an employee and who is an independent contractor.
Lastly, you can learn more about our services here!
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