Many Pennsylvanians affected by the COVID-19 pandemic were transitioned to working from home. This transition could lead many to be eligible to deduct certain home office expenses on their 2020 federal tax return.
However, the IRS said the “home office deduction” is available only to qualifying self-employed taxpayers, independent contractors and those working in the gig economy. Residents that remain employed through an employer are not eligible to claim the deduction, even if they are working from home for their job.
The Tax Cuts and Jobs Act of 2017 suspended the business use of home deduction from 2018 through 2025 for employees, the IRS said.
Certain expenses that can be deducted include the business portion of mortgage interest, insurance, utilities, repairs, maintenance, depreciation and rent.
To claim the deduction, the taxpayer needs to use a portion of the home exclusively for conducting business on a regular basis and the home must be the taxpayer’s principal place of business.
- There must be exclusive use of a portion of the home for conducting business on a regular basis. For example, a taxpayer who uses an extra room to run their business can take a home office deduction only for that extra room so long as it is used both regularly and exclusively in the business.
- The home must be the taxpayer’s principal place of business. A taxpayer can also meet this requirement if administrative or management activities are conducted at the home and there is no other location to perform these duties. Therefore, someone who conducts business outside of their home but also uses their home to conduct business may still qualify for a home office deduction.
If you have questions on whether you would qualify for the deduction, you can contact a tax professional for guidance.
© 2021 Cox Media Group