With so many workers relocating their offices to their homes as a result of the pandemic, a common question for many taxpayers is “Do I qualify to claim my home office as a tax deduction?”
The answer is – it depends.
Unfortunately, for salaried employees (workers who are paid via a W-2), the Tax Cuts and Jobs Act of 2017 took this deduction away from this category of workers. That being said, W2 employees working from home might check with their employers to see if they will reimburse them for costs associated with maintaining a home office as allowed under Section 139. We posted info on this valuable employee benefit available only during a time of crisis at:
However, independent contractors and self-employed individuals will qualify to claim this deduction on their tax return. To qualify for the home office tax deduction, a taxpayer must have a segregated workspace in their house used regularly and exclusively for work purposes.
Taxpayers have two options for claiming the deduction. The first method allocates a percentage of actual home expenses (mortgage payments, homeowners’ insurance, utilities, repairs and maintenance) as a home office expense. For those less diligent in keeping records, the “simplified method” allows taxpayers to use a standard $5 per square foot, capped at 300 square feet of allowed office space, to determine the deduction for a home office.
More info on the home office deduction is available at: https://www.irs.gov/businesses/small-businesses-self-employed/home-office-deduction