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If you’re one of the millions of people who worked remotely in 2021, you may be wondering whether that means a sweet deduction at tax time. Hold up, though: The IRS has strict rules for taking the home office deduction.
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7 Essential Rules for Claiming a Work From Home Tax Deduction
Thinking about claiming a home office deduction on your tax return? Follow these tips to avoid raising any eyebrows at the IRS when you file your 2021 tax return, which is due on April 18, 2022.
1. You can’t claim it if you’re a regular employee, even if your company is requiring you to work from home due to COVID-19.
If you’re employed by a company and you work from home, you can’t deduct home office space from your taxes. This applies whether you’re a permanent remote worker. It also applies if your office was temporarily closed in 2021 because of the pandemic. The rule of thumb is that if you’re a W-2 employee, you’re not eligible for a work-from-home tax deduction.
This wasn’t always the case, though. The Tax Cuts and Jobs Act of 2017 suspended the deduction for miscellaneous unreimbursed employee business expenses, which allowed you to claim a home office if you worked from home for the convenience of your employer, provided that you itemized your tax deductions. The law nearly doubled the standard deduction. As a result, many people who once saved money by itemizing now have a lower tax bill when they take the standard deduction.
2. If you have a regular job but you also have self-employment income, you can qualify.
If you’re self-employed — whether you own a business or you’re a freelancer, gig worker or independent contractor — you probably can take the deduction, even if you’re also a full-time employee of a company you don’t own. It doesn’t matter if you work from home at that full-time job or work from an office, as long as you meet the other criteria that we’ll discuss shortly.
You’re only…
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