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The New Home Office Deduction Rules

Ed McLeod

January 20, 2020

Prior to 2018, many taxpayers who worked from home were eligible to deduct the cost of their qualified home office as a miscellaneous itemized deduction on Schedule A of their individual income tax return.  But the home office and all other miscellaneous itemized deductions were eliminated under the Tax Cuts and Jobs Act (TCJA).  Although W-2 employees have lost this deduction, it is still available for a self-employed proprietor (Schedule C), a partner (Schedule E) or a farmer (Schedule F). 

To be considered a home office, the area must be regularly used exclusively for your self-employed business. It also must be your primary place of business or a separate structure used in connection with your business.  Since the
home office deduction may be a helpful tax savings tools and relatively easy to abuse, there are some stringent tests to pass in order to qualify for this deduction.

You must meet one of the three usage requirements to qualify the home office unless you qualify for the special exceptions for the storage of products or daycare facilities.  In addition to meeting the usage requirement, you must also meet the exclusive and ongoing requirements to qualify.

If your home office qualifies under the usage, exclusivity and regular use requirements, some extremely valuable tax deductions are available, such as additional vehicle travel expenses, direct office expenses, and indirect home expenses.

Sometimes some small, technical changes may qualify the home office for the write-off.  For more details, read the full revised article on our website at the following link: Home Office Deduction

Or, please contact us so we can assist you with this or any business or individual tax matters.  You may call us at 407-847-7466 or email us at taxes@sbc-cpa.com.

 

NOTICE: Unless expressly stated otherwise, any accounting, business or tax advice contained in this communication is not intended as a thorough, in-depth analysis of specific issues, nor a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties.

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