Work From Home Tax Deductions: How To Claim Them
Working from home became a norm and a need during the COVID-19 pandemic, a trend that many people continue to embrace. In fact, a quarter of Americans are currently doing so despite the relative end of the pandemic. With tax season 2023 in full swing, knowing how to navigate working-from-home tax deductions can help you save time — and money — on your returns.
Read: 3 Ways Smart People Save Money When Filing Their Taxes
What Are Working From Home Tax Deductions?
When you work from home as self-employed, the IRS allows you to claim expenses on your tax return that you cannot do if you work for a company. Suppose you worked from home in 2022 due to COVID-19 or for any other reason. In that case, you may include some deductions on your return, reducing your taxable income and decreasing the overall taxes you owe for that year.
If you are a W2 employee, these deductions may not apply to your case. The rule is that only self-employed people or those who work gigs can benefit from the tax deductions available. However, that doesn’t mean complete disqualification from these deductions. Still, they must relate to self-employed income instead of employee work.
Can You Get a Tax Deduction Working From Home?
Yes, if you work from home full-time, you can claim additional deductions on your tax return for the expenses incurred. Had you worked onsite for a company, those expenses would not apply to you. However, remember that this doesn’t mean you can claim anything you use as an expense. 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. However, your home office must be a space you use exclusively and regularly for work for those deductions to apply.
What Can You Write Off on Your Taxes if You Worked From Home in 2022?
If you are self-employed, there are multiple things that you can write off if you work from home. Some of these include Individual Retirement Plans (IRAs), a home office, supplies, depreciation of property and equipment, educational expenses and even travel fare.
Can You Write Off Your Internet Bill if You Work From Home?
You can claim your home internet bill as a deductible expense on your taxes, but there is a way to do so correctly. If you use your internet for personal and business purposes, you can only deduct the portion explicitly used for business.
Should You Save Your Receipts?
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.
Final Take
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. 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.
However, the specific deductions depend on your circumstances, so always speak to a professional if you are unsure to avoid paying the penalty.
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- Nolo. "Can You Deduct Your Home Office When You're an Employee?"
- Debt.org. 2023. "How Working from Home Affects Income Taxes."
- TurboTax. 2022. "Top Tax Write-offs for the Self-Employed."
- Business Insider. 2022. "10 of the most common self-employment tax deductions for 2022."
- Business Insider. 2022. "WFH tax deductions explained: who qualifies and how to claim them."
- TurboTax. 2022. "Tax Tips for Employees Who Work at Home."
