Can you get a tax deduction for working from home? What to know before you file
The coronavirus pandemic left many U.S. workers doing their jobs from home, but not everyone will be able to deduct those expenses from their federal taxes.
While some people who run business operations from their houses or apartments may be able to claim home office deductions, employees aren’t eligible for them, according to the IRS.
Here’s what to know about who qualifies and how to deduct work-from-home costs as the April 18 federal tax deadline nears.
Who is eligible to get deductions?
While people who received W-2 forms from their jobs can’t get the tax break, gig workers and independent contractors may be eligible, CNBC reported in March. Other U.S. taxpayers who might be able to deduct for at-home work include those who are self-employed or partners in a business.
To qualify, you must regularly use part of your home solely for business purposes. Also, your home should be the place where you ”generally” do work-related tasks, according to tax experts.
“Deductible expenses for business use of your home include the business portion of real estate taxes, mortgage interest, rent, casualty losses, utilities, insurance, depreciation, maintenance, and repairs,” the IRS said on its website. “In general, you may not deduct expenses for the parts of your home not used for business, for example, lawn care or painting a room not used for business.”
How can you claim the deduction?
If you’re still working on your 2021 taxes, there are some options you have for determining possible deductions.
The first is the “simplified method,” which has “a rate of $5 a square foot for business use of the home,” the tax agency said. “With that option, the space can be as large as 300 square feet and the deduction can be up to $1,500.
Another option — called the “regular method” — involves filing Form 1040, Schedule C. You must first calculate the deduction on Form 8829, then include it along with the Form 1040 filing.
“When using the regular method, deductions for a home office are based on the percentage of the home devoted to business use,” the IRS said on its website. “Taxpayers who use a whole room or part of a room for conducting their business need to figure out the percentage of the home used for business activities to deduct indirect expenses. Direct expenses are deducted in full.”
This story was originally published April 14, 2022 at 11:06 AM.
