Many people who set up temporary workspaces at home in the early months of the pandemic upgraded their home offices as they continued to work remotely in 2021. Others set up home offices after they left their jobs and started their own businesses, or started doing some freelance work on the side. Some people who work from home can take a tax deduction for their home office expenses, but many are not eligible for this break. It depends on whether you have a dedicated home office space where you don’t do anything else and whether you work for an employer or are self-employed.
Under the current law, you can only qualify for the home office deduction if you’re self-employed. This wasn’t always the case. The law changed for 2018 through 2025 to eliminate the home office deduction for people who work for an employer. If you’re an employee, your home office expenses are not tax-deductible – even if your employer closed the office and required you to work remotely. “They can’t take the deduction,” says Morris Armstrong, an enrolled agent in Cheshire, Connecticut, who is authorized to represent taxpayers in front of the IRS.
Two home offices can look the same but have a different tax status. Armstrong worked with a couple who both had offices in their home – one spouse was an employee working remotely for an employer, and the other was self-employed. Only the spouse who was self-employed could take the home office deduction. The home office expenses were not tax-deductible for the spouse who was an employee – even though she worked from home, too.
You may be eligible for the home office deduction if you had any income from self-employment in 2021. But the rules are strict for the office to qualify. Here’s how to find out whether you’re eligible for the break and what expenses you can deduct.
Who Is Eligible for the Home Office Deduction?
Self-employed people can deduct home office expenses from their business income if their office qualifies. This includes people who work from home full time, as well as people who have a freelance side gig – even though they may also work for an employer – and people who were self-employed for just a few months.
For example, if you did some consulting for a few months while looking for a full-time job, you can take the home office deduction for the months when you were self-employed and working from home. You must have some Schedule C income from self-employment to be eligible to take the home office deduction.
Does Your Home Office Qualify for the Tax Break?
Your home office must also meet certain standards to be eligible. To qualify for the home office deduction, you must use part of your home “regularly and exclusively” for business. Your office doesn’t need to be in a separate room, but it has to be in an area of your home where you don’t do anything else. It can be a dedicated nook in the corner of your basement, for example, but it can’t be the kitchen table where your family also eats.
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