Dear Tax Genius,
My company shifted to working from home in early 2020. I have an office set up and I bought multiple items for work, like a printer and new chair. My household utility bills are also higher now that I’m home all the time. Which work from home expenses can I deduct on my taxes?
- Deduction Seduction
Dear Deduction Seduction,
Unfortunately, there aren’t really any federal tax breaks for employees who worked from home during the coronavirus pandemic. The few deductions that previously existed were either curbed or eliminated by the 2017 Tax Cuts and Jobs Act. The home office deduction isn’t available to employees after 2017 and the miscellaneous itemized deduction (which covered unreimbursed work-from-home costs) was eliminated.
So unless you want to start a side business that’s based out of your home, which may qualify you for the home office deduction, then your best bet is probably to ask your employer to reimburse work expenses. You may be able to deduct mileage if you used a personal vehicle for work, and certain employees, like reservists of the armed forces and fee-based government officials, can still actually deduct some work-related expenses.
If you’re a nonexempt employee , the Fair Labor Standards Act (FLSA) may also require your employer to cover work-from-home expenses (like an increased electricity or internet bill) if they bring your earnings below the minimum wage or reduce any applicable overtime compensation. But, again, this isn’t a tax break and requires you to ask your employer to reimburse you. People with disabilities have access to similar protections and people who live in a handful of states, like California, may also have state-level protections. (Learn more in the Department of Labor’s guide to COVID-19 and the FLSA.)
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The home office deduction is available to self-employed workers, independent contractors, and small business owners. Employees cannot claim the home office deduction . If you qualify, this tax deduction allows you to deduct the cost of maintaining an office space in your home, including the cost of certain utilities, business supplies, office furniture, and even some property taxes.
For an office to qualify, it doesn’t need to be a dedicated room — a corner or nook could qualify — but that space must be used exclusively for your business. So if you have a spare bedroom where you work but where guests sometimes sleep or the children sometimes play, you don’t qualify for the home office tax deduction. Your home office must also be your primary place of business. So if you rent an office and work there most of the time, but sometimes work from home, your home office doesn’t qualify.
Note that if you’re filing taxes for 2017 or earlier, you may still be eligible to deduct the cost of maintaining a home office. Check the IRS’s website to learn more.
Learn more about how to claim the home office deduction.
The 2017 tax reform eliminated the itemized deduction for unreimbursed business expenses, but a very small group of employees can deduct business expenses on their 2020 tax returns by completing IRS Form 2106:
Reserve members of the Armed Forces
Qualified performing artists (requires an adjusted gross income of $16,000 or less)
State or local government officials who work on a fee basis
Employees with physical or mental disabilities who incur impairment-related work expenses (such as for attendant care)
To qualify, your expenses must be "necessary and ordinary," meaning they’re common for people in your profession and they were unavoidable. Record keeping is also important. Save all receipts for lodging and keep receipts for any other purchases worth $75 or more. (But even for lower-cost expenses, you probably want to err on the side of saving more receipts than you need.) Also keep in mind you can deduct these expenses whether you itemize deductions or claim the standard deduction.
For help filing your taxes, consider using one of this year’s best tax filing services, which give you access to a tax expert.
If you used a personal vehicle for business or charitable purposes, you may be eligible for mileage reimbursement on your federal income tax return. Beyond just the cost of fuel, depreciation in your vehicle’s value may qualify for reimbursement.
In addition to the individuals in the previous section, who can get mileage reimbursed as part of work-related expenses, you may qualify for mileage reimbursement if
You’re self-employed and use a personal vehicle for business.
Your mileage was necessary for medical or dental care. (Also look into the medical expense deduction.)
Your mileage was from volunteering for a nonprofit.
Learn more about how mileage reimbursement works in 2021.
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