Work From Home Tax Deductions: Who Qualifies and What You Can Claim

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Working from home is much more common than it used to be. According to the U.S. Bureau of Labor Statistics, approximately 22.4 million American workers telecommuted for their jobs last year.

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.

Work From Home Tax Deductions: At a Glance

• Applies mainly to self-employed individuals and freelancers.
• Most W-2 employees working from home do not qualify.
• Home office must meet regular and exclusive use rules.
• Only the business portion of expenses may be deducted.

Note that if you are paid solely as an employee, working from home full-time does not qualify you for a deduction.

Who Qualifies for Work From Home Tax Deductions?

Here’s a breakdown of who may qualify for these deductions and what they should know.

Self-Employed, Freelancers and Independent Contractors

You generally qualify for work from home tax deductions if all of the following apply:

• You are self-employed, a freelancer or an independent contractor rather than a W-2 employee. 
• You use part of your home regularly and exclusively for business, and it is your principal place of business or where you handle administrative or management tasks.
• You incur ordinary and necessary expenses related to operating your business from home. 

W-2 Employees Working From Home

Back before the Tax Cuts and Jobs Act (TCJA) of 2017 was passed, W-2 employees who worked from home could qualify for certain home office tax deductions. 

Even though the TCJA expired at the end of 2025, the tax break for W-2 employees was not reinstated in 2026, according to Nolo. 

The work from home tax deduction generally only applies to self-employed individuals, such as freelancers and business owners. So, even if your employer requires you to work from home, federal tax law does not currently allow you to deduct those expenses as a W-2 employee.

Hybrid Workers — W-2 and Side Gigs

You may qualify for work from home tax deductions if you are a W-2 employee and are self-employed or work side gigs.

However, deductions will only apply to those expenses related to the side gig because the Internal Revenue Service (IRS) does not allow you to claim expenses related to a W-2 job.

What Counts as a Home Office

The place where you reside and run a business, side gig or other self-employed venture typically counts as a home office.

If you are self-employed, you must use the space regularly and exclusively as your primary place of business to qualify for the home office deduction. This means that only the portion of your home used exclusively for your side gig qualifies. Exclusive use means the area cannot double as a guest room, dining area or personal workspace.

You may 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

However, any part of your property used as a hotel, motel or inn does not qualify for the home office deduction.

What Expenses You Can and Can’t Deduct

If you work from home, you may claim additional deductions on your tax return for business-related expenses. You cannot claim every household expense, however, and these deductions do not apply if you are a W-2 employee working from home.

Home-Related Expenses: Direct vs. Indirect

The IRS separates expenses into direct and indirect categories, and only the percentage tied to business use may be deducted.

• Direct expenses: Apply only to the home office and are generally fully deductible.
• Indirect expenses: Apply to the entire home and must be divided between personal and business use, based on the percentage of the home used for work.

Work-Related Supplies, Equipment and Expenses

Supplies and equipment you purchase to use while working from home are deducted as regular business expenses and are not subject to the home office percentage calculation.

Common examples include:

• Office supplies
• Business travel
• Advertising

Quick Examples

The following examples show how work from home tax deductions may apply and are not official IRS decisions:

• A freelance writer using a spare bedroom exclusively for client work may qualify.
• A full-time remote employee with no side business does not qualify.
• A consultant using a detached garage office only for contract work may qualify.

How To Calculate Your Home Office Deduction

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

Regular Method

Under the regular method, you calculate the home office deduction by dividing household expenses between personal and business use.

Direct business expenses are fully deductible, while indirect expenses are allocated based on the percentage of your home used for work.

If you operate a qualified daycare and do not use your home exclusively for business, the deduction is based on both space and time used for business activities.

Self-employed taxpayers who file Schedule C (Form 1040) calculate this deduction using Form 8829, which determines the allowable business portion of home expenses.

Simplified Method

The simplified option requires fewer calculations. Eligible taxpayers can deduct $5 per square foot of home office space, up to 300 square feet, for a maximum deduction of $1,500.

Under this method, depreciation is treated as zero, and the deduction is claimed directly on Schedule C (Form 1040) without filing Form 8829. Taxpayers indicate their election by entering both total home square footage and office square footage on Schedule C.

Home-related expenses that are deductible regardless of business use, such as mortgage interest or property taxes, may still be claimed in full on Schedule A (Form 1040) if otherwise eligible.

How To Claim Work From Home Tax Deductions

To claim the work from home tax deduction, confirm eligibility, keep receipts, choose a calculation method and complete the appropriate forms. Self-employed individuals claim this deduction on Schedule C (Form 1040) and may need Form 8829.

Common Mistakes That Trigger IRS Scrutiny

• Using your home office for personal purposes
• Claiming expenses tied to a W-2 job 
• Failing to keep receipts
• Miscalculating square footage
• Choosing the wrong deduction method 

What Records You Need To Keep

The following records help support your deduction if the IRS questions your return or pursues an audit:

• Rent or mortgage statements
• Utility bills
• Repair receipts
• Square footage calculations
• Internet and phone bills

State Tax Rules for Remote Workers

State tax rules can vary based on where you live, where your employer is located and where you physically work. Your home state typically taxes all income, but other states may also tax income earned while working there, even temporarily.

Some states apply a “convenience of the employer” rule, which allows them to tax remote workers if the employer is based in that state and remote work is not required for business reasons. This can result in multi-state filing requirements and unexpected tax bills, even if you never travel to your employer’s state.

Final Take

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 a home office deduction or other work from home deductions that aren’t permissible, you may owe taxes or penalties, despite it being a mistake.

If you’re considering a home office deduction, remember:

• Work from home deductions are limited.
• Most W-2 employees do not qualify.
• Self-employed workers may qualify.
• Save your documentation.

Hiba Boutary and Angela Mae Watson contributed to the reporting of this article.

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