2024 and 2025 Work From Home Tax Deductions

Work from home deductions allow certain taxpayers to reduce their taxable income by claiming expenses related to their home office. For 2024 and 2025, deductions may include a portion of rent, utilities, internet and office supplies, provided the space is used exclusively and regularly for work. While employees typically cannot claim these expenses, self-employed individuals and independent contractors may benefit under specific guidelines. Understanding the eligibility rules and documentation requirements can help maximize potential savings when filing taxes.

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History of the Work-From-Home Tax Deduction

Prior to the Tax Cuts and Jobs Act of 2017, salaried employees could deduct expenses required to perform their duties from home via the home office deduction. Reasonable expenses might include office furniture, computers and other tools of whatever trade they plied. There were restrictions, but pretty much anyone who needed to work from home could qualify for the deduction.

Today, of course, many more people are working from home and, as a result, employee outlays for things like faster internet connections, upgraded home networking gear, desks and the like are up. Travel and entertainment expenses are down, again as a result of the pandemic-related travel decline and advancements in technology.

However, significant changes were introduced with the TCJA, which eliminated the home office deduction for most employees working from home. Before the tax law took effect, employees could deduct unreimbursed business expenses, including home office costs, if they exceeded 2% of adjusted gross income (AGI).

This change, which applies through 2025, means only self-employed individuals, freelancers, and independent contractors can claim these expenses. The deduction’s scope has also evolved over time, with clearer rules on what qualifies as a “dedicated workspace.”

Who Qualifies for Work from Home Deductions?

To qualify, the space must meet two key criteria: exclusivity and regularity. Exclusivity means the area is used solely for work-related activities, while regularity requires consistent use as a primary place of business. For example, a spare bedroom converted into a dedicated office would qualify, but a kitchen table used for both work and dining would not.

The deduction also extends to a variety of business types, from sole proprietorships to limited liability companies (LLCs) and partnerships, as long as the eligibility requirements are met. Accurate record-keeping and documentation are critical to substantiate claims during an audit.

Employees generally do not qualify for these deductions. However, whether a worker is an employee or independent contractor may not always be obvious. This distinction is usually based on the contractual agreement and working conditions at the time of filing. Typically, if a worker receives a W-2 statement showing wages paid and taxes withheld, he or she is an employee. If the worker instead gets a 1099-MISC reporting earnings, he or she is an independent contractor and may be able to claim work-from-home expenses.

Then again, some exceptions apply to military reservists, performing artists and fee-based government officials, who may claim deductions under certain conditions.

Home-Based Worker Exceptions

In addition to contractors and the self-employed, the IRS recognizes employees in four different groups as potentially eligible for to deduct at least some expenses required to work from home. They are:

Performing arts: Performing artists may be qualified for these deductions if they have performed for at least two employers during the tax year, had adjusted gross income for $16,000 or less before deductions and incurred allowable expenses of at least 10% of gross income from their artistic endeavors.
Military: U.S. military reservists of the Army, Navy, Marines, Air Force, Coast Guard, National Guard or Public Health Service may also be able to deduct some qualifying expenses.
Government workers: State and local government officials, either elected or appointed, may get to take deductions for home-based work expenses if they are compensated at least in part on a fee basis.
Workers with disabilities: People with physical or mental disabilities that limit their ability to be employed can deduct expenses necessary for them to work from home, including attendant care, home modifications or special equipment.

How to Claim Work from Home Deductions?

To claim work-from-home deductions, eligible taxpayers must file Form 1040 and complete Schedule C (Profit or Loss from Business) if they are self-employed. The deductions are calculated based on the portion of the home used exclusively for business. This involves determining the percentage of your home’s total square footage allocated to the workspace.

There are two methods to calculate the deduction: the simplified method and the regular method.

Simplified method: A deduction of $5 per square foot of the workspace, up to 300 square feet, is permitted under the simplified method, resulting in a maximum deduction of $1,500.
Regular method: Requires detailed documentation of actual expenses like utilities, rent or mortgage interest and depreciation, and allocates them proportionally based on the workspace size.

While the simplified method is less time-consuming, it may not provide as much benefit as the regular method for those with higher expenses.

Accurate record-keeping is essential. Taxpayers should retain receipts, utility bills and other documentation to support their claims. And remember, the workspace must meet the IRS’s exclusive-use and regular-use requirements to qualify, and improper claims could trigger an audit.

Anticipated Changes Beyond 2025

Unless Congress amends the TCJA, the rules limiting employee deductions will expire after 2025. This change could restore the ability for employees to deduct unreimbursed work expenses, including home office costs. Staying informed about tax law updates is crucial for adapting your tax strategy.

Bottom Line

Expenses for working from home have not been deductible for most employees since the 2017 tax reform law. Self-employed independent contractors still can deduct expenses for home offices, as well as some groups of employees, including workers with disabilities. However, the current limitation on deductions may end after 2025, unless Congress extends it.

Tips for Tax Planning

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