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Tax Tips for Employees Who Work at Home
Written by Riley Adams, CPA • Reviewed by a TurboTax CPA
Updated for Tax Year 2022 • December 1, 2022 09:17 AM
Since the 2018 tax reform, at-home expense deductions for employees have been reduced but remain for self-employed workers.
Can you claim work from home tax deductions?
Who can claim 2022 tax deductions when working from home, tax tip 1: deduct home office expenses if you only worked for yourself or worked for yourself in addition to a w-2 job., tax tip 2: keep thorough records and save receipts., tax tip 3: consider the simplified home office deduction to ease your record keeping., tax tip 4: consider taking the direct method if it provides a bigger deduction., tax tip 5: each year you can switch between the simplified and direct method to take the biggest tax deduction., how do you calculate the home office deduction as a self-employed person, can i use the same space for my w-2 job and side gig and still claim the deduction, the best of both work worlds, file 100% free with expert help.
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If you’re an employee, you can claim certain job-related expenses as a tax deduction, but only for tax years prior to 2018. For tax year 2018 and on, unreimbursed expenses and home office tax deductions are typically no longer available to employees.
The number of employees working from home has grown considerably due to the COVID-19 pandemic. Just a few years ago, these employees may have been eligible for tax deductions that were unavailable to in-office employees. Now, with only a few exceptions, only self-employed people are eligible to claim tax deductions when working from home.
Before you claim these deductions, be sure you meet the IRS’ criteria, or you could face additional taxes or penalties.
Since the 2018 tax reform became law, generally only self-employed people can claim tax deductions when working from home. Working as an employee and for yourself doesn’t necessarily disqualify you from taking these tax deductions. The deductions have to be related to your self-employed income rather than your employee work.
Even in this situation, you’ll generally need to make sure your home office is only in support of your self-employment and not your job as an employee. For other expenses such as phone and Internet, you can split these between working for yourself, as an employee or as a personal expense. For deducting home office space on your tax return, the IRS requires these expenses to be used exclusively for your self-employed business.
To claim a home office as a business expense, you must use part of your home as your principal place of business or a place where you regularly meet greeting clients or customers or store inventory. If your home office is a separate structure then it does no have to be your principal place of business.
To understand more about how you can claim tax deductions when working from home, take a look at the following tax tips for employees.
Many employees work from home because it's convenient for their employer. For example, a salesperson who lives in a different state than company headquarters, may work from home rather than the company paying for office space.
If you only worked as an employee during the tax year, you can't typically claim home office expenses related to your work. If, however, you worked for yourself in some capacity, you might be able to deduct home office expenses.
If your home office is used exclusively and regularly for your self-employment, you may be able to deduct a portion of your home-related expenses, such as mortgage interest, property taxes, homeowners insurance, and utilities. You do not have to meet the exclusive use test if you claim the deduction for using your home as a daycare facility.
You need to keep accurate records of any expenses you claim as a deduction. The IRS recommends keeping a written record or log book in the event any questions arise about your deductions.
You should also save proof of payment for any tax-related expenditures. This proof may be in the form of a credit card or bank statement, canceled check, or itemized receipt. If you paid in cash, the receipt should include the payee's name, the date of the payment, and the amount. Digital records will usually satisfy this requirement as long as you can retrieve them when needed.
TurboTax Tip: Keep copies of all tax-related items and documents for at least three years. This includes receipts, invoices, tax forms, and any other supporting documentation.
When eligible to claim the home office deduction on your taxes, you have two ways of claiming the deduction: the simplified method and the direct method.
The simplified method is just that: simple. You can use this method to determine your home office deduction on your return by expensing $5 per square foot of your office, up to 300 square feet for a maximum of $1,500. The other option, the direct method, is more involved but could result in a bigger deduction.
The other way to claim the home office deduction is by using the direct method. This involves tracking all of your home office expenses in addition to any costs related to repairing and maintaining the space. Further, you can claim deductions for a portion of other expenses based on the proportion of the space to the rest of your residence.
To get the biggest deduction possible, you may need to calculate your deduction using both the direct and simplified methods to see which one comes out ahead for your taxes.
You don’t need any reason to switch from one method to the other year-to-year.
Calculating the home office deduction under the simplified method is straightforward. You take the square footage of your home office used exclusively for your self-employed business and multiply it by $5 per square foot up to a maximum of $1,500 per year.
The direct method, by comparison, requires more work on your part throughout the year and when preparing your return. But, it may also save you more on your taxes.
The direct method determines the home office tax deduction based on the percentage of your home office square footage to your entire home.
Divide the square footage of your home office by the square footage of your entire living space to calculate the percentage of your home that is dedicated to your home office. This percentage is then applied to your home expenses to determine what amount might be a business expense.
You can claim a percentage of expenses such as rent, mortgage interest, utilities, insurance, and repairs. Depreciation is also an allowable expense for a home that you own.
For example, if your office is 250 square feet and your home is 1,000 square feet, you'd deduct 25% of your allowable expenses (250/1,000 = 0.25). If you had $10,000 in eligible home-related expenses, you could claim up to $2,500 in deductions.
The direct method has no maximum deduction limit, making it more attractive in some instances than the simplified method. You may consider calculating both methods to help determine which method is best for your situation.
When using the direct method, you also need to account for depreciation of a portion of the house if you own it. You don't need to worry about calculating this when using the simplified method for taking the home office tax deduction.
If you use your home office for your W-2 job and your side gigs, you won’t be able to claim your home office as a tax deduction.
The IRS allows you to deduct expenses for having a dedicated space where you regularly and exclusively conduct your self-employed business. This is true whether you live in a house, apartment, condo, mobile home or boat, as well as external structures like a barn, garage or workshop.
If you have separate spaces for your employee job and for your self-employment work, then the eligible expenses for your self-employment space can still be deductible even though the expenses for your employee space isn't.
One option for employees who must pay for business expenses related to working at home, is to seek reimbursement from your employer. Reimbursements are typically tax-free as long as your employer has an accountable plan. This means they require you to submit an expense report or some other means of accounting for your expenses. Being reimbursed for an expense is almost always better than taking a deduction for the same expense on your taxes.
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Did you work from home this year? When you can claim the home-office tax deduction

Did your "Great Resignation" lead you to start a business or become your own boss this year?
You may be able to write off the cost of your home office come tax time.
"Knowing that you're not a 9-to-5 [worker] anymore, you can now take advantage of the home-office deduction," said Sheneya Wilson, CPA and founder of Fola Financial in New York, adding that it's one of the biggest deductions that people who work out of their homes can take.
Here's who can claim the deduction
There are some parameters when it comes to who is eligible for the home-office deduction, even though millions of Americans worked from home this year due to the ongoing coronavirus pandemic.
The tax break is generally only for those who are self-employed, gig workers or independent contractors, not those who are employed by a company that gives them a W-2 come tax season.
"Employees who receive a paycheck or a W-2 exclusively from an employer are not eligible for the deduction, even if they are currently working from home," the IRS said in a September 2020 reminder on the home-office deduction.
There may be some confusion, as the home-office deduction was previously allowed for employees. The Tax Cuts and Jobs Act of 2017, however, banned such workers from taking the deduction from 2018 to 2025.
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To claim the home-office deduction in 2021, taxpayers must exclusively and regularly use part of their home or a separate structure on their property as their primary place of business. This includes a place where you greet clients or customers, conduct your business, store inventory, rent out or use as a daycare facility.
You don't have to be a homeowner to claim the deduction — apartments are eligible, as are mobile homes, boats or other similar properties, according to the IRS.
It's also possible to take only part of the deduction. For example, if you left a 9-to-5 job, started your own business in 2021 and use your home as your primary office space, you may be able to claim the deduction for part of the year, according to Wilson.
How the deduction works
There are two ways that eligible taxpayers can calculate the home-office deduction.
In the simplified version, you can take $5 per square foot of your home office up to 300 square feet, giving the method a $1,500 cap.
This home office needs to be only used for your business — as in, it can't be a guest room with a desk in it — and you must be able to prove that you need an office for your work. The burden of proof for taking this deduction is on the taxpayer, so if you're audited, you will have to back up your claim to the IRS.
The regular version of the deduction is a bit more complicated, as you must keep track of all your actual expenses. You can write off up to 100% of some expenses for your home office, such as the cost of repairs to the space.

You can also deduct a portion of other expenses, including utilities, based on the size of your office versus your home. For example, if your home office is 10% of your entire living space, you can deduct that much from the costs of mortgage, rent, utilities and some kinds of insurance. IRS Form 8829 will help you figure out the eligible expenses for business use of your home.
Because of this calculation, people with larger homes may not get as much using this method, said Markowitz. You can switch methods year to year and should try to calculate both to see which will yield a larger deduction.
If you aren't eligible
While employees may feel like they're missing out, the home-office deduction isn't generally leading to outsized savings for those who take it.
The $1,500 maximum for the simplified deduction generally equates to about 35 cents on the dollar for most taxpayers, said Markowitz. That ends up being about a $525 write-off, he said.
In addition, taking the deduction could make it more difficult to sell your home in the future, if you own. That's because you can depreciate the value of your home office, which could create a tax event later when you sell.
Still, that doesn't mean the home-office deduction isn't worth taking if you're eligible for it.
"If you're eligible for it and the government is going to give you the money for it, you should take it," said Markowitz.
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- Main content
- How work from home tax deductions work
- Who is eligible for work from home deductions?
- How to claim work from home deductions
- How to calculate work from home tax deductions
WFH tax deductions explained: who qualifies and how to claim them
Our experts answer readers' tax questions and write unbiased product reviews ( here's how we assess tax products ). In some cases, we receive a commission from our partners ; however, our opinions are our own.
- Work from home tax deductions allow self-employed people to reduce their taxable income.
- W2 employees generally can not take work from home deductions.
- Freelancers and gig workers generally qualify as having business income and are thus eligible for work from home deductions.
- See Personal Finance Insider's picks for the best tax software .
Work from home (WFH) tax deductions are business expenses that you can subtracted from revenue to lower your tax bill. But these deductions almost exclusively apply to those who own their own businesses or have some sort of self-employment income, such as freelancers and gig workers. Regular W2 employees generally can't take these deductions, even if you switched from working in an office to working from home.
Perhaps the most prominent WFH tax deduction is the home office deduction, which allows you to reduce your taxable income based on the expense of maintaining a home office. But there can also be other deductions that apply to running a business out of your home or being an independent worker who incurs some relevant business expenses, ranging from computer equipment to retirement contributions.
How work from home tax deductions work
WFH tax deductions work by allowing those with self-employment income to offset some of their business income with relevant expenses, which are considered to be "ordinary and necessary" for their work.
According to the IRS , "an ordinary expense is one that is common and accepted in your industry. A necessary expense is one that is helpful and appropriate for your trade or business. An expense does not have to be indispensable to be considered necessary."
For example, if a freelancer takes in $50,000 in a given year based on what they bill clients, but then they also have $10,000 in expenses like advertising, home office supplies, and the business use of a car, then they would only be taxed on $40,000 (aside from any other types of income, deductions or credits).
For simplicity's sake, suppose this person paid taxes at a 20% rate (actual amounts would likely differ). Instead of paying 20% of $50,000, which would be $10,000, the freelancer would pay 20% of $40,000, which equals $8,000. So, those $10,000 in WFH expenses reduce the total tax bill by $2,000 in this scenario.
Who is eligible for work from home deductions?
Because of the Tax Cuts and Jobs Act (TCJA), which came into effect during the 2018 tax year, employees are generally not eligible to take WFH deductions, even if they have significant expenses that their employers won't reimburse.
There are a few exceptions, such as for " eligible educators ," who can deduct as much as $250 in unreimbursed expenses. Otherwise, you must own your own businesses or have some sort of self-employment income such as from freelance work in order to qualify for WFH tax deductions.
"Miscellaneous itemized deductions prior to 2018 used to be claimed on Schedule A, but since the Tax Cuts and Jobs Act, those deductions really went away. So for W2 employees, it's really difficult to be able to take any kind of [work-related] deduction at all," explains Mark Witte, CPA and managing director at UHY Advisors . Previously, employees could deduct itemized expenses that totaled more than 2% of their adjusted gross income. However, the TCJA is only set to run through 2025 , so it's possible that old rules will come back into play. Some states did not follow the TCJA and still allow for taxpayers to itemize their deductions, including unreimbursed employee expenses, subject to limitations.
"Potentially, once that expires, W2 employees could take deductions again. I haven't seen anything on the horizon to speed up that deadline," adds Witte.
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How to claim work from home deductions
Claiming WFH deductions doesn't have to be complicated, especially if you use tax software or have a tax professional's help. Even if you were to file taxes manually, those with self-employment income who file Schedule C can fill in line items for different categories of expenses, such as advertising and business insurance. Use Form 8829 to calculate the allowable expenses for business use of your home.
The main thing to remember is whether an expense is ordinary and necessary for your business. Building a gym within your home office because you want to work out during the day probably wouldn't be something you could claim as it's not an ordinary and necessary expense for, say, a real estate agent or IT consultant. But buying a printer for your home office to use for work could be something that's justifiable.
Taxpayers should keep records "of any kind of potential expenses that are deemed reasonable and necessary for them to operate their business and generate their revenue," says Witte. "If they deal with a financial professional or a tax preparer, they can certainly bounce ideas off of them. They could keep a simple Excel spreadsheet, listing down all the money they spend that they think relates to the business, and then with the CPA they can hash out what qualifies, or if something has some personal use to it, then maybe they can take a piece of that expense."
How to calculate work from home tax deductions
Calculating WFH deductions can differ a bit depending on what expenses you want to deduct. One of the more prominent ones, the home office deduction, allows renters and homeowners who regularly and exclusively use part of their home as their principal place of business to reduce their taxable income based on this expense. If you used that portion of your home during just part of the year, you can only deduct expenses incurred during that time.
To calculate the home office deduction, you can use one of the following options:
- Simplified option : Since tax year 2013, under the simplified option for calculating the home office deduction, you can deduct $5 per square foot used for your business, up to 300 square feet. For example, a 200-square-foot home office could potentially equal a $1,000 deduction. Other expenses related to your home, such as mortgage interest, could then be claimed in full under Schedule A, which is used for itemized deductions.
Using the regular method can also have further tax consequences down the line if you own your home and later sell it or dispose of the property. If you sell or dispose of the property at a profit, you will have to recapture the depreciation previously allowed or allowable for the portion of the home used in a qualified business, and may pay up to 25% rate in capital gains.
Other types of expenses, such as home office supplies, can be more straightforward, especially if they're exclusively for business. In these cases, you can often fully deduct the cost of the item. For example, if you spend $100 to make business cards for yourself, you can generally deduct that $100 in full.
Regardless of the method used, you may not take a home office deduction in excess of the gross income from business use of the home minus business expenses. Excess amounts may be carried forward under the regular method, and are not allowed to be carried forward under the simplified method.

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- How Working from Home Affects Income Taxes
Home > Taxes > How Working from Home Affects Income Taxes
Your company sent everyone home when the pandemic began in March 2020, and here you are, still working from home as tax time approaches in 2023.
The number of people working from home was 17.9% at the end of 2021, the U.S. Census determined, and most experts agree is closer to 25% at the end of 2022. A PEW research survey found that six out of 10 people who can do their jobs from home are doing just that at least one day a week. Most say they prefer it and plan to continue.
U.S. tax law, however, has not caught up to the fact that as many as a quarter of Americans are working from home, paying for expenses their employers once did and not getting anything in return. Unreimbursed itemized tax deductions ended with the 2017 Tax Cuts and Jobs Act (TCJA), passed by Congress and signed by President Donald Trump, and they haven’t come back, despite the workforce changes the pandemic spurred.
If you’ve been working from home since 2020 and filed 2020 and 2021 taxes , you are already aware that there are no tax breaks for unreimbursed work expenses like supplies, office furniture, the higher energy bills from working at home, and all the other things you pay out of pocket for so you can do your job. If you’re new to working at home, this is your wake-up call.
“Employers can reimburse employees for some expenses, but very few have those benefit programs set up,” Beth Logan, a federally licensed tax professional with Kozlog Enterprises LLC , said.
If you’re self-employed and work at home, the tax picture is a little brighter, but also a lot more complicated. You can deduct a home office and a variety of other expenses related to working from home, but there are strict rules.
Can I Claim Working from Home on My Taxes?
Before the 2017 tax change, employees could deduct a wide range of unreimbursed work-related expenses from their taxes, including mileage, home office supplies, union dues, uniforms, internet, telephone, magazine subscriptions and more. The definition of an “employee” is that taxes, Medicare and Social Security are deducted from your paycheck. If you get a W-2 form at the end of the year, you’re an employee; if you get a 1099 form, you’re self-employed and you must pay income tax, Medicare, and Social Security.
That all changed with the 2018 tax year. “There are no special write-offs for you, even if you’ve invested in a sweet little home office set-up,” said Jim Pendergast, senior vice president of AltLINE Sobanco, a division of The Southern Banking Co. “The IRS tends to qualify any of these remote-employee office investments as ‘miscellaneous itemized deductions,’ which don’t net you any deductions.”
Before the 2017 tax change, taxpayers could also deduct their mortgage interest, state and local taxes, charitable donations and more. To itemize, rather than claim the standardized deduction, all expenses had to add up to more than 2% of the tax return’s adjusted gross income.
After the 2017 tax law, itemized deductions can only be taken if they are greater than the standardized deduction, which was nearly doubled with the new tax law.
For those filing in 2023, the standardized deduction is $12,950 for single filers; $19,400 for head-of-household filers; and $25,900 for married people filing jointly. Most people working at home would have expenses well below those figures.
Self-employed workers, who are considered business owners by the IRS, can still itemize and deduct their expenses, including for their home office, mileage, office furniture, supplies, advertising and marketing costs, and other expenses, including meals in some cases. But they must follow strict rules and pay a steep self-employment tax.
Can I Deduct My Home Office from My Taxes?
If you are an employee of a business, even if you work from home 100% of the time, you cannot deduct your home office from your taxes. If you’re self-employed, you can.
In fact, the home office deduction is the biggest tax option for self-employed workers, said Anna Barker, founder of LogicalDollar, and an attorney who advises clients on tax matters. The catch is the portion of your home must be “used exclusively and regularly for business purposes,” Barker said, it’s not just a matter of setting up the laptop on the kitchen counter and calling it an office.
The key word is “exclusively.”
“A guest bedroom doubling as a freelancer’s office doesn’t qualify, because it’s not a dedicated, exclusive area for business,” Pendergast said. “Neither does a photography studio in your den. The space and its items must be exclusively for professional use.”
The definition of “exclusive use” is very strict, Logan, the tax accountant, said. “One famous case involved a person who had a room used exclusively for work, but the closet stored their out-of-season clothes,” she said. “Because the taxpayer had to pass through the office to get to the closet, the office was not considered exclusively for work. The deduction for that space was disallowed.”
I’m Self-Employed, How Do I Deduct My Home Office?
Self-employed workers who deduct their home office, as long as it’s exclusively used for work and nothing else, can use the “regular” method or the “simplified” method.
Home Office Deduction Simplified Method
A simplified home office deduction claims $5 per square foot up to a maximum of 300 square feet, for a $1,500 deduction.
“If you choose to use this method, it’s a good idea to enlarge your home office space up to the limit to get the full deduction,” Barker said.
Regular Method for Deducting Home Office
The regular method deducts a portion of all relevant home-related expenses based on home office square footage. If the home office is 10% of the square footage of the house, the taxpayer can claim 10% of home-related expenses as their home office deduction. That means 10% of things like property taxes, mortgage interest and utilities. The math can get complicated, so it’s a good idea to hire a professional to prepare your taxes if you use the regular method.
“It’s important to maintain detailed records of all of these expenses to justify what you’re claiming,” Barker said.
I’m an Employee Who Also Does Gig Work, Can I Deduct My Home Office?
If you’re an employee, but have a self-employed side gig, you can deduct your home office if you only use it for your self-employed work.
“If you use the same desk while working as an employee and as a freelancer, or as a freelancer and for personal use, the deduction is not allowed,” Logan said.
Do Teachers Get a Tax Deduction for Working from Home?
Teachers come under the same rules all other employees. If they teach from home, they do not get any special tax breaks. The 2017 tax law, however, did provide one small tax break. Teachers can deduct up $250 a school year for unreimbursed expenses. Two qualified teachers filing jointly can claim $500.
To qualify, they must teach a grade between kindergarten and 12th grade or be a counselor, principal or classroom aide working in a school that provides elementary or secondary education and work at least 900 hours during the school year.
Qualified expenses include professional development courses, books, supplies, computer equipment, related software and services, supplementary materials and more.
What Can You Write off on Your Taxes If You Work from Home?
There is nothing work-related most people who are employees working from home can write off when filing taxes in 2023, Logan said.
The IRS does allow specific groups some wiggle room. Armed forces reservists, qualified performing artists, fee-basis state or local government officials and employees with impairment-related work expenses can claim certain unreimbursed expenses.
Self-Employment Deductions
Self-employed workers can claim work-related deductions, including:
- 100% depreciation on large purchases (a new computer, home office furniture, etc.)
- Mileage at a rate of 62.5 center per mile set by the IRS
- Household expenses pro-rated for the amount related to work, including utilities, cell service, internet, property taxes, rent, mortgage interest (but not mortgage payments) and more
- Work-related meals are 50% deductible (save the receipt and write down the purpose)
- Business loan interest
- Health and business insurance
- Publications and subscriptions
- Retirement fund contributions
Logan cautioned self-employed workers to be accountable for their deductions. “People may want to take large deductions, but they need to keep records and receipts,” she said. “If the deductions look out of place for the work activity, the deductions might flag the taxpayer for an audit.”
Self-Employment Tax
Though self-employed workers can write off expenses, it’s not all one big money ride. They also must pay a federal 15.30% self-employment tax on their income, which goes to Social Security and Medicare. Even if you’re an employee, if you do freelance work, you must pay self-employment tax on your freelance income. The good news is that half of the self-employment tax is deductible from net (after-taxes) income.
Has COVID-19 Changed Anything About Filing Taxes in 2023?
There were no special federal tax breaks for those forced to work from home by the COVID-19 pandemic in 2020. Two years’ perspective hasn’t changed that.
The only tax provision for individuals spurred by the pandemic was a CARES Act provision that allowed those taking the standardized deduction to also deduct up to $300 in charitable contributions. That expired at the end of 2021, so it can’t be claimed in 2023.
Will It Be Like This Forever?
The Tax Cuts and Jobs Act remains in effect until Dec. 31, 2025, when Congress can renew it, alter portions of it, or scrap it.
Logan said some members of Congress want to extend the TCJA, but portions will likely expire, so the first changes will be when employees working from home in 2026 file their taxes in 2027.
“Assuming TCJA expires without any tax law changes, unreimbursed expenses will be deductible on the Schedule A,” Logan said. She added that, though, that employees working from home should remember that those deductions are limited, including the exclusivity of the home office rule.
“Only expenses exceeding 2% of the taxpayer’s adjusted gross income are deductible, and the deduction is only allowed if the taxpayer itemizes (rather than takes the standardized deduction),” she said.
In the more immediate future, the IRS adjusted the 2023 tax year standardized deductions for inflation. When you file taxes in 2024, the standardized deduction for single filers will be $13,850, for heads of households $20,800 and for married filing jointly $27,700.
How Does Working from Home Affect State Taxes?
States may have their own working from home tax rules. Residents of the 43 states that have some form of individual income tax should check to see if their state has tax breaks they can claim.
Most state tax rules for working from home are in relation to those who live in one state and work for a company located in another state. Most of these were drawn up long before COVID-19, and assume a worker physically commutes across the state line.
If your state has a state income tax, you always file an income tax return in your home state. If you work remotely for a company located in another state, you may be required to file a tax return in that state, too, depending on that state’s tax law. That return is only for the money you make working for that business, not any other income. There are 16 states that have reciprocal agreements with other states, allowing workers to only file in their home state.
If you do have to file in two states, you get a tax credit, so you’re not taxed twice on the same income. At least, that used to be the case.
When workers were sent home during the pandemic, things got complicated. People hunkered down in vacation homes, or their parents’ house two states away, or some other location that wasn’t in their home state. This spurred a lot of temporary tax rules, most of which have expired. But five states — Connecticut, Delaware, Massachusetts, New York and Pennsylvania – now have a “convenience” tax rule that allows the state where a business is located to tax a remote worker who lives in another state, without providing the tax credit.
Many states have also adjusted their tax laws regarding how long you must live there in order to be considered a resident, or made other small changes that could affect how, or even where, you pay state income tax.
If you work from home, even in a state that doesn’t have an income tax, but are paid by a business in another state, having your taxes professionally prepared may save you money.
In fact, if you are self-employed, or have a freelance side gig and work from home, the best “tax break” you can get is to hire a tax accountant. They can save you money that’s well worth the fee.

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Keep in mind that rules are strict to qualify for the home office deduction. (Getty Images)
The way people work changed during the pandemic, and even though most companies have reopened their offices, many employees still do some work from home.
Some work on a hybrid schedule with three days in the office and two at home, others are searching for new jobs they can do remotely now that they've had a taste of the work-at-home life, and some are starting their own businesses and doing self-employed work from home rather than returning to an employer's office.
Only one of these groups can take the home office deduction.
Who Is Eligible for the Home Office Deduction?
Under the current law, you can qualify for the home office deduction only if you’re self-employed. This wasn’t always the case, and these rules may not last forever. The law changed for 2018 through 2025 to eliminate the home office deduction for people who work for an employer.
So, if you’re an employee, your home office expenses are not tax deductible – even if you do all of your work from home. “They can’t take the deduction,” Morris Armstrong, enrolled agent in Cheshire, Connecticut, says.
Two home offices can look the same but have different tax statuses. Armstrong worked with a couple who both had offices in their home – one was working remotely for an employer and the other was self-employed. Only the spouse who was self-employed could take the home office deduction.
You may be eligible for the home office deduction if you had any income from self-employment in 2022 – even if you weren't a full-time business owner. But the rules are strict for that office to qualify.
Self-employed people can deduct home office expenses from their business incomes if their offices qualify. This includes people who work from home full time , those who have freelance side gigs (even though they may also work for employers) and those who were self-employed for a few months.
For example, if you did some consulting for a few months while looking for a full-time job, you can take the home office deduction for the months during which you were self-employed and working from home. You must have some Schedule C income from self-employment to be eligible for the home office deduction.
Does Your Home Office Qualify for the Tax Break?
Your home office must meet certain standards to be eligible. To qualify for the home office deduction, you must use part of your home “regularly and exclusively” for business.
Your office doesn’t need to be in a separate room but it has to be in an area of your home where you don’t do anything else. It can be a dedicated nook in the corner of your basement, for example, but it can’t be the kitchen table where your family eats.
“There doesn’t have to be a wall that cordons it off – if you have an area that is designated as your home office and nothing else is done in that area, you have an exclusive area,” Trish Evenstad, enrolled agent and president of Evenstad Tax and Financial Services Inc. in Westby, Wisconsin, says.
“It may be just your desk and 5 feet around it in your basement. But if it’s your kitchen table and your family eats dinner there, too, you just lost the deduction,” she says. There are special rules for day care centers and inventory storage.
The space must also be your principal place of business or a place where you meet regularly with clients or patients. It doesn’t have to be the only place where you do work – it can be the place where you conduct administrative tasks for your business, for example.
“If you’re a plumber and you work in different places but your administrative work is always done in that home office, then that would qualify,” April Walker, certified public accountant and the American Institute of CPAs’ lead manager for tax practice and ethics, says.
How Do You Calculate Your Home Office Deduction?
There are two options for taking the deduction. The simplified option is easier but may result in a smaller tax break. The standard option requires more complicated calculations and record-keeping but could give you a larger deduction.
“To maximize the home office expense, they should calculate the expenses under both methods each year and determine which option yields the higher expense,” Jean Wells, CPA and associate professor at the Howard University School of Business, says. You can change the method from year to year, she says.
The Standard Option
When you use this method you deduct your actual expenses. You can deduct 100% of some of your home office expenses, such as the cost to paint or make repairs to that specific area.
You can also deduct a portion of some overall house expenses based on the area of your home you use as a home office. For example, if your home office is one-tenth of the square footage of your house, you can deduct 10% of the cost of your mortgage interest or rent, utilities (electric, water and gas) and homeowners insurance . You can also deduct 10% of other whole-house expenses, such as cleaning and exterminator fees.
In addition, you can deduct a portion of your home's property taxes and depreciation.
Those calculations are complicated, but the instructions to IRS Form 8829 can help, Chris Hesse, CPA and principal with the National Tax Office of CliftonLarsonAllen LLP in Richland, Washington, says. For a list of eligible expenses see IRS Publication 587 . Keep receipts of these expenses in your tax files.
The Simplified Option
The IRS introduced a simpler option for deducting home office expenses in 2013. Instead of keeping records of all of your expenses, you can deduct $5 per square foot of your home office (up to 300 square feet) for a maximum deduction of $1,500. As long as your home office qualifies, you can take this tax break without having to keep records of specific expenses.
“I like the (simplified method) because you don’t have to keep as meticulous records and you don’t have to worry about depreciation recapture when you sell your house,” Curt Sheldon, certified financial planner and enrolled agent in Alexandria, Virginia, says.
How Do You Take the Deduction?
If you use the simplified method, you take the deduction directly on Schedule C by reporting your business income and expenses. If you choose the standard method, you must submit Form 8829 with your income tax return and report the total deduction from your business income on Schedule C.
Your deduction may be limited if your home office expenses are more than your business income for the year.
“The business use of home expense can not make the Schedule C income go below zero,” Evenstad says. “If there is unused business use of home expenses, it will carry over to the next year as long as the regular method is used. If the simplified method is used then the carryover is disallowed,” she says.
If you used the simplified method for 2021 but aren't using it for tax year 2022, you may have unallowed expenses from a prior year on Form 8829 that you can carry over to your 2022 Form 8829, Wells says.
What if You Were Self-Employed for Just a Few Months?
If you were self-employed for just a few months – for example, if you did some consulting while looking for full-time work – you may be able to take a partial home office deduction.
“If the taxpayer is self-employed for only part of the year, then they must use expenses only for the months that they were self-employed to calculate their home office expense deduction,” Wells says.
“For example, if the taxpayer did consulting work from their home office from August to December, then the home office expenses would be prorated for the five months that they worked from home,” she says.
If you use the simplified deduction of $5 per square foot (up to 300 feet), you can prorate the amount based on the number of months you worked from home.
For example, if you worked from home for five months and your home office was 300 square feet, you can take a $625 home office deduction, Wells says. (If your home office was 300 square feet or larger, you can deduct $125 for each month that you worked from home.)
You must be engaged in the business for at least 15 days in the calendar month to take the home office deduction for that month, Armstrong says.
You can also deduct a portion of your actual expenses – such as mortgage interest or rent, utilities and homeowners insurance (based on the percentage of your home’s square footage that you used as a home office) – for the months you worked from home.
Regardless of how long you worked in the home office, you must have used the space regularly and exclusively for business during those months. Keep this requirement in mind if you’re setting up a temporary office in your home, even if you don’t plan to start your own business permanently: It doesn’t have to be a separate room but it has to be a space you use exclusively for your business.
What Other Home Office Expenses Are Tax Deductible?
If you’re self-employed – even if you’re just doing some freelance work – you may be able to deduct other expenses for setting up an office in your home. Furniture and equipment are deductible as business expenses on Schedule C, Wells says.
For example, the cost of buying a computer (based on the portion of time you used it for business), printer, modem, office desk and chair, file cabinets and even lighting for Zoom calls you make for your business can be tax deductible as a business expense on Schedule C. If you had a dedicated phone line or internet connection for the business you can deduct those expenses, too.
For more information about tax-deductible business expenses, see IRS Publication 535 Business Expenses .
Tax Changes for 2023
Jessica Walrack Jan. 23, 2023

Tags: money , personal finance , taxes , tax deductions

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2023 Work From Home Tax Deductions

The 2017 tax reform law ended the ability for most taxpayers to deduct expenses for working from home just in time for millions more people to begin working from in response to the Covid pandemic . Nowadays only a few select groups of salaried home-based workers can still deduct relevant expenses. However, even if you’re not one of these, there are still a few possible ways for you to get tax deductions from your expense for working from home. A financial advisor can help you find every deduction and credit you are entitled to.
Prior to 2017, salaried employees could deduct expenses required to perform their duties from home. Reasonable expenses might include travel and entertainment, office furniture, computers and other tools of whatever trade they plied.
Today, of course, many more people are working from home and, as a result, employee outlays for things like faster Internet connections, upgraded home networking gear, desks and the like are up. Travel and entertainment expenses are down, again as a result of pandemic-related travel decline. But home office expenses of whatever variety are no longer deductible except for a handful of exceptions.
Home-Based Worker Exceptions
The tax recognizes employees in five different groups as potentially eligible for at least some expenses required to work from home. They are:
- Performing artists may be qualified for these deductions if they have performed for at least two employers during the tax year, had adjusted gross income for $16,000 or less before deductions and incurred allowable expenses of at least 10% gross income from their artistic endeavors.
- U.S. military reservists of Army, Navy, Marines, Air Force, Coast Guard, National Guard or Public Health Service may also be able to deduct some qualifying expenses.
- State and local government officials, either elected or appointed, may get to take deductions for home-based work expenses if they are compensated at least in part on a fee basis.
- People with physical or mental disabilities that limit their ability to be employed can deduct expenses necessary for them to work from home, including attendant care.
- Teachers of grades kindergarten through 12 can deduct qualified expenses for books, supplies, computers, software, and other expenses required for working from home. This exception also applies to counselors, principals and aides.
How to Claim Work From Home Deductions

Tax deductions for expenses needed to work from home are only available to taxpayers who itemize their deductions. Also, work from home expenses can only be written off if they exceed 2% of adjustable gross income . As is the case with most tax matters, tax payers may be required to show receipts and other documentation of deductible expenses. Deductible expenses are reported on Form 2106.
This IRS form is then attached to the main 1040 tax return and the work from home expenses are reported on Schedule A, the schedule for itemized deductions.
Other Approaches
Work from home expenses are still deductible for self-employed people . So if a worker is classified as an independent contractor rather than a regular employee, the above restrictions don’t apply.
Self-employed independent contractors also get a number of deductions that are not available to employees, including those among the exceptions. Those can include outlays for utilities, insurance and depreciation of assets including computers and real estate.
Determining whether a worker is an employee or independent contractor can be complicated and the IRS makes the determination on a case-by-case basis. However, generally speaking, if a worker receives a W-2 statement showing wages paid and taxes withheld, he or she is an employee. If the worker instead gets a 1099-Misc reporting earnings, he or she is an independent contractor and may be able to claim work from home expenses.
If a home-based worker is a regular employee and not one of the excepted types, one way to get some help with the costs of working from home is to get the employer to cover the costs. The employer can purchase needed items and provide them to the employee, or the employee can purchase them and get reimbursed. The employer will then be able to deduct the reimbursements as business expenses .
As part of their pandemic responses, some states are requiring employers to reimburse employees for expenses if the employers are requiring employees to work from home. In order to keep employees form having to report reimbursements as taxable income, employers may n need to set up specific policies describing which expenses are subject to reimbursement.
Bottom Line

Expenses for working from home are not deductible for most employees since the 2017 tax reform law. For people filing for tax years before 2018 work from home deductions can be used. Also, the current limitation on deductions is set to expire in 2025, so after that tax year expenses for working from home will again be deductible for many employees. However, some groups of employees may still be able to take these deductions. And self-employed independent contractors still can deduct expenses for home offices. Employers may be able to reimburse employees for necessary expenses and then deduct the outlays as business costs.
Tips on Taxes
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You’ll get tax relief based on the rate at which you pay tax.
Example If you pay the 20% basic rate of tax and claim tax relief on £6 a week, you would get £1.20 per week in tax relief (20% of £6).
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Here’s what taxpayers need to know about the home office deduction
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IRS Tax Tip 2020-98, August 6, 2020
The home office deduction allows qualifying taxpayers to deduct certain home expenses on their tax return. With more people working from home than ever before, some taxpayers may be wondering if they can claim a home office deduction when they file their 2020 tax return next year.
Here are some things to help taxpayers understand the home office deduction and whether they can claim it:
- Employees are not eligible to claim the home office deduction.
- The home office deduction Form 8829 is available to both homeowners and renters.
- There are certain expenses taxpayers can deduct. They include mortgage interest, insurance, utilities, repairs, maintenance, depreciation and rent.
- Taxpayers must meet specific requirements to claim home expenses as a deduction. Even then, the deductible amount of these types of expenses may be limited.
- Includes a house, apartment, condominium, mobile home, boat or similar property.
- Also includes structures on the property. These are places like an unattached garage, studio, barn or greenhouse.
- Doesn't include any part of the taxpayer's property used exclusively as a hotel, motel, inn or similar business.
- There must be exclusive use of a portion of the home for conducting business on a regular basis. For example, a taxpayer who uses an extra room to run their business can take a home office deduction only for that extra room so long as it is used both regularly and exclusively in the business.
- The home must be the taxpayer's principal place of business. A taxpayer can also meet this requirement if administrative or management activities are conducted at the home and there is no other location to perform these duties. Therefore, someone who conducts business outside of their home but also uses their home to conduct business may still qualify for a home office deduction.
- Expenses that relate to a separate structure not attached to the home will qualify for a home office deduction. It will qualify only if the structure is used exclusively and regularly for business.
- The simplified option has a rate of $5 a square foot for business use of the home. The maximum size for this option is 300 square feet. The maximum deduction under this method is $1,500.
- When using the regular method, deductions for a home office are based on the percentage of the home devoted to business use. 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.
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Home Office Deduction: Can You Claim This Tax Break If You Work from Home?
If you're working from home, your employment status determines whether you can claim the home office deduction on your tax return.
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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?
Tax Changes and Key Amounts for the 2022 Tax Year
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.
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W-4 Form: Extra Withholding, Exemptions, and Other Things Workers Need to Know
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) (opens in new tab) 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.
What Are the Income Tax Brackets for 2022 vs. 2023?
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.
The key to the home office deduction is to use part of your home "regularly and exclusively" as your principal place of business. If you only work from home for part of the year, you can only claim the deduction for the period that you can satisfy the "regularly and exclusively" requirements.
"Regular use" means you use a specific area of your home (e.g., a room or other separately identifiable space) for business on a regular basis. Incidental or occasional use of the space for business doesn't count.
"Exclusive use" means you use a specific area of your home only for your trade or business. The space doesn't have to be marked off by a permanent partition. You can't claim the home office deduction if you use the space for both business and personal purposes. However, the exclusive use requirement might not apply if you use part of your home:
- 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.
(See IRS Publication 587 (opens in new tab) for more information about these and other requirements for the home office deduction.)
What's Your Standard Deduction?
If you qualify, there are two ways to calculate the home office deduction. Under the "actual expense" method, you essentially multiply the expenses of operating your home by the percentage of your home devoted to business use. If you work from home for part of the year, only include expenses incurred during that time. Under the "simplified" method, you deduct $5 for every square foot of space in your home used for a qualified business purpose. Again, you can only claim the deduction for the time you work from home. For example, if you have a 300-square-foot home office (the maximum size allowed for this method), and you work from home for three months (25% of the year), your deduction is $375 ((300 x $5) x 0.25).
Tax Tip : If you use the simplified method, you can't depreciate the part of your home used for business. However, to the extent you qualify, you can still claim itemized deductions for mortgage interest, real property taxes, and casualty losses for your home without allocating them between personal and business use.
The deduction is claimed on Line 30 of Schedule C (Form 1040) (opens in new tab) . 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 (opens in new tab) 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.
Most-Overlooked Tax Deductions and Credits for the Self-Employed
Rocky was a Senior Tax Editor for Kiplinger from October 2018 to January 2023. He has more than 20 years of experience covering federal and state tax developments. Before coming to Kiplinger, he worked for Wolters Kluwer Tax & Accounting and Kleinrock Publishing, where he provided breaking news and guidance for CPAs, tax attorneys, and other tax professionals. He has also been quoted as an expert by USA Today , Forbes , U.S. News & World Report , Reuters , Accounting Today , and other media outlets. Rocky has a law degree from the University of Connecticut and a B.A. in History from Salisbury University.
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Employees who work from home can no longer claim tax deductions for their unreimbursed employee expenses or home office costs on their federal
The home office deduction is a nice tax break, but it's only for the self-employed, not remote workers.
Did you work from home this year? When you can claim the home-office tax deduction. Published Fri, Dec 3 202110:48 AM EST. thumbnail.
How work from home tax deductions work ... WFH tax deductions work by allowing those with self-employment income to offset some of their business
Can I Claim Working from Home on My Taxes? Before the 2017 tax change, employees could deduct a wide range of unreimbursed work-related
So, if you're an employee, your home office expenses are not tax deductible – even if you do all of your work from home. “They can't take the deduction,” Morris
Here's a guide to claiming deductions and other tips on how to handle your federal taxes if you are an employee working from home.
You may be able to claim tax relief for additional household costs if you have to work at home for all or part of the week. If you previously claimed tax
With more people working from home than ever before, some taxpayers may be wondering if they can claim a home office deduction when they
If you're working from home, your employment status determines whether you can claim the home office deduction on your tax return.