No matter your career, coronavirus has changed all our working routines in one way or another. Whether it means wearing a mask to work every day or staying home and working from your kitchen table, work life definitely feels and looks different in 2020.
If you’re one of the many who’s been working from home this year, you may be wondering, “Can I deduct my work-from-home expenses due to coronavirus?”
TurboTax has you covered and is here to answer the most common remote-working questions we’re seeing, including what type of remote work qualifies for tax deductions and what work-related items you may be able to deduct.
If I’m an employee and have been required to work from home due to coronavirus, can I deduct my work-from-home expenses?
Although there has been an increase in employees working at home due to coronavirus, under tax reform employees can no longer take federal tax deductions for unreimbursed employee expenses like work-from-home expenses. In general, only self-employed individuals can take deductions for expenses related to working from home. *Reservists, performing artists, and fee-based government officials may be able to deduct certain unreimbursed business expenses
If I can’t deduct work-from-home expenses as an employee, is there anything I can do to offset some of my out of pocket expenses related to work?
Although you can’t take federal tax deductions for work-from-home expenses if you are an employee, some states have enacted their own laws requiring employers to reimburse employees for necessary business expenses or allowing them to deduct unreimbursed employee expenses on their state tax returns. You can check with your individual state departments of revenue. TurboTax will also be up to date with the individual state laws, so you don’t need to know if your state allows unreimbursed employee deductions.
If my employer has an accountable plan, can I be reimbursed for business expenses?
Yes, an accountable plan is a plan set up by employers to reimburse employees for business-related expenses. As long as the plan follows IRS regulations, employees can be reimbursed for necessary business expenses.
I’m self-employed, what work-from-home expenses can I take?
Self-employed business owners can deduct up to $1,040,000 ($1,020,000 in 2019) for qualified business equipment like computers, printers, and office furniture. The amount you can deduct is still limited to the amount of income from business activity. You can also deduct supplies that you buy like paper, printer ink, or supplies for your customers, and you can take the home office deduction.
What is the home office deduction and how does it work?
The home office deduction may be one of the biggest work-from-home expenses a self-employed person can take since you can take a deduction that is a portion of your home mortgage interest or rent, property taxes, homeowners insurance, utilities, and depreciation based on the square footage of space used directly and exclusively for your business.
There is also a simplified method that is up to $1,500 (up to 300 square feet x $5 per square foot) that gives you a flat deduction without taking into account individual home expenses. The simplified method allows for less record-keeping, however, the original home office deduction can give you a bigger deduction. For instance, if your home office takes up the maximum 300 square feet of your home the maximum you can deduct is $1,500 under the simplified home office deduction, but if you use up to 300 square feet of your 2,000 square foot home and your home expenses are $40,000 your deduction will be $6,000 (300/2000 sq ft x 40,000).
If I’m self-employed but don’t have an office in my home and instead work from my kitchen table, can I take the home office deduction?
No, you must have a dedicated space where you conduct your business. You can’t claim the home office deduction for conducting business in the same space your family eats and your kids do their homework. Your home office must be your principal place of business; a place where you meet patients, clients, or customers in the normal course of business; a separate structure not attached to the dwelling and used in connection with the business.
What if I’m a teacher and have been required to work from home? Can I deduct work-from-home expenses?
You may have been working from home toward the end of last school year and it looks like many teachers may continue instructing from home in the Fall. If you’re a teacher keep in mind that although you can’t deduct work-from-home expenses like the home office deduction, you can take the Teachers Educator Deduction worth up to $250 for supplies you buy directly related to teaching. If you and your spouse are both teachers that can be up to a $500 tax deduction.
Don’t worry about knowing these tax rules. TurboTax will ask you simple questions about you and give you the tax deductions and credits you’re eligible for based on your entries. If you have questions you can connect live via one way video to a TurboTax Live CPA or Enrolled Agent to get your tax questions answered. TurboTax Live CPAs and Enrolled Agents are available in English and Spanish, year round and can also review, sign, and file your tax return.
You can also visit our Self-Employed Coronavirus Relief Center to get up-to-date information, tax advice, and tools to help you understand what coronavirus relief means for you if you are self-employed.