The IRS has issued a statement on an issue that has been raised by many federal employees who—like many others in the private sector—have been teleworking full-time for months: whether they can claim a home office deduction when they file their taxes next year for 2020 income.
In sum, the answer was no, regarding work related to a salaried federal position—but maybe, related to side income such as self-employment income. It says:
“The home office deduction is available to qualifying self-employed taxpayers, independent contractors and those working in the gig economy. However, the Tax Cuts and Jobs Act suspended the business use of home deduction from 2018 through 2025 for employees. Employees who receive a paycheck or a W-2 exclusively from an employer are not eligible for the deduction, even if they are currently working from home.”
“There are two basic requirements to qualify for 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.
“To claim the deduction, a taxpayer must use part of their home for one of the following: exclusively and regularly as a principal place of business for a trade or business; exclusively and regularly as a place where patients, clients or customers are met in the normal course of a trade or business; as a separate structure that’s not attached to a home that is used exclusively and regularly in connection with a trade or business; on a regular basis for storage of inventory or product samples used in a trade or business of selling products at retail or wholesale; for rental use; as a daycare facility.”
Those who do qualify under those standards may be eligible for deductions related to the business portion of such costs as real estate taxes, mortgage interest, utilities and insurance, but not expenses for the parts of their home not used for business, it said.
Further details are at https://www.irs.gov/taxtopics/tc509.
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