2021 tax deduction for remote work? Tips as the deadline approaches
The coronavirus pandemic has left many American workers doing their jobs from home, but not everyone will be able to deduct these expenses from their federal taxes.
While some people who run business operations from their home or apartment may be able to claim home office deductions, employees are not eligible, according to the IRS.
Here’s what to know about who qualifies and how to deduct work-from-home expenses as the April 18 federal tax deadline approaches.
Who can benefit from the deductions?
While people who received W-2 forms from their jobs may not qualify for the tax relief, gig workers and independent contractors may be eligible, CNBC reported in March. Other US taxpayers who may be able to deduct for working from home include those who are self-employed or partners in a business.
To be eligible, you must regularly use part of your home solely for business purposes. Plus, your home should be where you “usually” do work-related tasks, according to tax experts.
“Deductible expenses for the business use of your home include the business portion of property taxes, mortgage interest, rent, losses, utilities, insurance, depreciation, maintenance and repairs” , the IRS said on its website. “Generally, you cannot deduct expenses for parts of your home that are not used for business purposes, for example, lawn maintenance or painting a room not used for business purposes. “
How can you claim the deduction?
If you’re still working on your 2021 taxes, you have several options for determining possible deductions.
The first is the “simplified method,” which has “a rate of $5 per square foot for business use of the home,” the tax agency said. “With this option, the space can be up to 300 square feet and the deduction can be up to $1,500.
Another option — called the “regular method” — is to file Form 1040, Schedule C. You must first calculate the deduction on Form 8829, then include it 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 says on its website. “Taxpayers who use an entire room or part of a room to carry on business should determine the percentage of the house used for business activities to deduct indirect expenses. Direct expenses are fully deducted.
This story was originally published April 14, 2022 11:06 a.m.