Work From Home Tax Deductions: How To Claim Them

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Working from home is much more common than it used to be. According to the Pew Research Center, just over a third of American workers telecommuted for their jobs last year. This is slightly lower than the year before, but still higher than pre-pandemic levels.

With tax season just around the corner, knowing how to navigate work from home tax deductions can help you save time — and money — on your returns. Learn more about the home office tax deduction, and how it could apply to you.

Read: 3 Ways Smart People Save Money When Filing Their Taxes

What Are Working From Home Tax Deductions?

The IRS allows self-employed individuals (including freelancers) and business owners to claim certain business-related expenses — like property taxes, rent, maintenance or utilities — on their tax return. This is known as a home office tax deduction.

Suppose you worked from home in 2024. In that case, you may include some deductions on your return, reducing your taxable income and decreasing the overall taxes you owe for the year.

Eligibility Requirements for Claiming Home Office Deductions

You could claim the home office deduction as a renter or homeowner if you live — and work — in one of the following:

• Single-family house
• Apartment
• Houseboat
• Condo

Temporary accommodations, like Airbnbs and hotel rooms, don’t qualify for this deduction. However, a separate room in the house or structure on the property might. This could include an unattached garage, greenhouse, barn or studio. You’ll need to use the space exclusively or regularly as your primary place of business.

Even if you qualify for the deduction, how much you can claim on your tax return may be limited. You as the taxpayer must also meet the following criteria to qualify for this deduction:

• Use the space regularly and exclusively for business: You much regularly conduct business out of the space you mark on your tax return. Say you have a separate home office in your house. It will generally qualify for the deduction provided that room is only used for business-related purposes. Using it for additional purposes could disqualify it.
• Use the space as your primary place of business: Your home office must be the only location where you conduct your  business. The space may also qualify if it’s the only place where you handle management or administrative activities, like setting up appointments with clients or handling payroll.

As per the IRS, you may be able to claim the work from home tax deduction if any of the following apply:

• You offer day care services for minors, individuals with a qualifying disability or adults ages 65 and up (but you must have a valid certification, license or other form of approval to do so).
• You use the space for product samples or inventory storage for your business.

Are W-2 Employees Eligible for the Home Office Tax Deduction?

Back before the Tax Cuts and Jobs of 2017 Act was passed, W-2 employees who worked from home could qualify for certain home office tax deductions. This tax break has since been suspended, though that may change at the end of next year when the TCJA expires.

The work from home tax deduction generally only applies to self-employed individuals, freelancers and business owners. You may, however, qualify if you’re a W-2 employee and also work independently in a self-employed or entrepreneurial capacity, or who works side gigs.

If you are a W-2 employee who’s also self-employed, you’ll need to separate your home office space. The room or structure in which you work for your W-2 job won’t qualify for this tax break. The IRS won’t allow you to claim expenses on your tax return if they’re related to a W-2 job.

What Qualifies as a Home Office?

The place in which you reside and run a business, side gig or other self-employed venture will typically count as a home office. You’ll need to use that space regularly and exclusively for business-related activities.

Your home office could be your house, apartment, mobile home, condo, houseboat or a similar structure. It could also be a separate structure on your property, like a barn or garage.

Deductible Home Office Expenses

If you work from home, you can claim additional deductions on your tax return for any business-related expenses incurred. You can’t claim everything you use as an expense, however. The feasibility and limitations on what you can claim on your return depend on where you live, and not all costs are 100% covered.

For example, you can deduct a portion of your rent or mortgage, including repairs, supplies, utilities and home office. You may also be able to deduct property taxes.However, your home office must be a space you use exclusively and regularly for work for those deductions to apply.

Additional Tax Deductions for Remote Workers

If you are self-employed, there are multiple things that you can write off if you work from home. Some of these include:

• Internet and phone expenses: You can write off a percentage of your internet and phone bill as pertains to your business.
• Office supplies and equipment: Material, supplies and equipment can be written off in the tax year they’re used.
• Business use of your car: Self-employed individuals and business owners may write off a portion of their vehicular expenses if they use that vehicle for their business. Expenses include gas and oil, depreciation, lease payments, repairs, insurance and registration fees. Miles may also be deducted.
• Property depreciation: You may write off a portion of the depreciation of any property used in your business.
• Educational expenses: You may also write off work-related education expenses. These expenses must be related to improving or maintaining the skills required to continue doing your job, such as tuition, books and certain transportation costs.
• Travel fare: If you travel for your business, you may claim a deduction on your taxes.
• Individual Retirement Plans (IRAs): Traditional IRA contributions are deductible up to a certain point, while Roth IRA contributions are not.
• Medical expenses: Typically, you can deduct medical expenses (including dental) using Schedule A (Form 1040) if those expenses exceed 7.5% of your adjusted gross income.
• Other home expenses: You may also qualify for a deduction based on your home’s depreciation, mortgage interest or property insurance.

Every so often, the IRS audits tax returns to ensure that the deductions claimed on your return match what you are writing off. This audit is why you must save your receipts, especially those that pertain to business expenses. That way, you have proof that you made the purchases and won’t have to pay the penalty when all the evidence is available.

What If You Work for a Fully Remote Company?

Even if you are fully remote, working for an employer disqualifies you from receiving the home office tax write-off. However, you still have options. Eligibility for this deductible falls under two main categories: you use a section of your home regularly and exclusively for your work, and it’s your principal place of work. You can claim this deductible if you use your home office for administrative or management activities and if there is no other location where you do so.

If you are unsure if you qualify, always speak to a professional tax preparer or attorney to understand what you can and cannot claim. If you accidentally claim your office as a deductible, you may pay the penalty despite it being a mistake.

How to Calculate Your Home Office Deduction

You can calculate your home office tax deduction using one of the following methods:

• Simplified method: The simplified method involves dividing your home office expenses between personal and business use. This method has a rate of $5 per square foot (up to 300 square feet) for business-related use of the property or home. The deduction caps out at $1,500.
• Actual expenses method: This method involves calculating your actual expenses for everything related to your business, such as utilities, rent and maintenance. Form 8829 specifies which deductions you can take.

The simplified method is easier to use, but you may get a smaller overall tax break. Thee actual expenses method requires you to keep detailed records and receipts of everything you’ve paid for your business — but it could get you a higher deduction.

Filing Your Work From Home Deductions

Here’s how to claim the work from home tax deduction:

1. Check the requirements: You’ll need to use your home regularly and exclusively for business-related purposes.
2. Keep your receipts: If you plan to deduct expenses, make sure you have proof in case you ever need it, such as in an IRS audit.
3. Determine which method you want to use: The simplified and actual expenses methods have their pros and cons, so weigh your options carefully to see which gets you the better tax break.
4. Calculate your deductions: You can use Form 8829 for this.

Once you’ve done this, be sure to fill out the correct form (or forms):

• For self-employed: Claim this deduction on your Schedule C (Form 1040). You may also need Form 8829. You can find instructions for this on Schedule C, Line 30.
• For farming business owners: Complete Schedule F (Form 1040) and report your deduction on Line 32. Select “Business Use of Home.”
• For unreimbursed partnerships: You may need to complete several forms, including Schedule E (Form 1040), Schedule SE (Form 1040) and Schedule K-1 (Form 1065).

Learn more about what you can — and cannot — claim for your home office tax deduction, and how to file on the IRS’s official website.

Common Mistakes to Avoid When Claiming Work From Home Deductions

If you want to get the biggest tax break possible, here are some common mistakes to avoid when claiming your deductions:

• Failing to keep accurate records throughout the year
• Tossing out old receipts for the current or past few years (you might need them for a future audit)
• Using your home office for personal and business-related expenses (your home office must be exclusively and regularly used for your business)
• Choosing the wrong method (simplified vs. actual expenses)
• Not taking every deduction possible (even those easier to miss expenses count)
• Forgetting about the Deduction Recapture Rule (if you gain from selling your business property, you could be in for a future tax liability).

Final Take

Although working from home has become a common trend, especially after the COVID-19 pandemic, it is essential to understand the tax implications and what you are allowed to write off. Self-employed individuals can claim deductions related to expenses incurred while working from home, such as their home office, internet bills, travel expenses and supplies.

However, the specific deductions depend on your circumstances, so always speak to a professional if you are unsure to avoid paying the penalty.

Hiba Boutary contributed to the reporting of this article.

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