Taxpayers who use their home for business are allowed to claim the home office deduction on their federal taxes as long as they meet certain eligibility requirements.
The 2010 United States Census found 13.4 million Americans worked at least one day a week at home. But today, the coronavirus has people working from home, who never intended to, for an undetermined time period.
“The home office deduction basically had disappeared with the new tax law but...if people are forced to work at home which essentially creates another office of your company. That’s an interesting point to take advantage of,” CPA and tax expert Dan Geltrude told Yahoo Finance On the Move, but it’s a complex matter.
Geltrude added that “there’s all kinds of rules that are related to how that home office needs to be set up,” in order for it to be tax deductible. Things such as the “costs that are related to setting up your computer in a room.”
IRS home office guidelines
The IRS guidelines to deduct your home office require your home office be your regular place of business. “If you conduct business at a location outside of your home, but also use your home substantially and regularly to conduct business, you may qualify for a home office deduction,” according to the IRS.
“If you are self-employed, your office is in your house, you can take on what’s called your schedule C, which is the outline of your personal business activity,” Geltrade said.
Employees working for someone else may also be eligible to claim the home office deduction if your home office is “for the convenience of your employer.” But, the IRS says “if the use of the home office is merely appropriate and helpful, you cannot deduct expenses.”
Prior to the 2017 Tax Cuts and Jobs Act, many home offices were tax deductible, according to Geltrude. But now most individuals who work for someone else and have set up home offices to work from home during the coronavirus crisis won’t be allowed to file for the deduction because it’s not their regular place of business, according to Geltrude.
Adam Shapiro is co-anchor of Yahoo Finance’s “On the Move.”
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