In 2021 and 2022, an unprecedented number of workers and businesses adopted the “home office” model. If you work from home, you must be aware of these tax implications.
Since so many of us are now working remotely, you may be wondering if working from home will result in any tax breaks. If your small business qualifies for a home office tax benefit, should you be concerned about a potential audit? How does a business initially comply with the requirements?
Unfortunately, as a remote worker who is neither an employer nor a corporation, you are ineligible for the home office tax deduction.
Before the 2017 Tax Cuts and Jobs Act (TCJA) tax reform, employees were permitted to deduct unreimbursed employee business expenditures, which included the home office deduction.
The itemised deduction for employee business expenses has been discontinued for tax years 2018 through 2025.
You may have heard that claiming a home office deduction puts the IRS on alert and increases the probability of an audit.
This advice may have been useful in the past, but in the late 1990s, tax law changes made it simpler for those who work from home to be eligible for these deductions. If you are eligible, kindly accept it.
Unfortunately, you are not qualified for the home office tax deduction because you are a remote worker who is neither an employer nor a company.
Before the 2017 Tax Cuts and Jobs Act (TCJA) tax reform, workers could write off any business expenses they incurred that weren’t repaid, including home office expenses.
For the tax years, 2018 through 2025, the itemised deduction for employee business expenditures has been eliminated.
You may have heard that claiming a home office deduction raises the likelihood of an audit and alerts the IRS.
For tax years 2018 through 2025, the itemised deduction for employee business expenditures has been eliminated.
You may have heard that claiming a home office deduction increases the likelihood of an IRS audit and raises a red flag for the agency.
This suggestion may have had some value in the past, but changes to the tax rules in the late 1990s made it easier for persons who work from home to qualify for these deductions. Please accept it if you are qualified.
Am I eligible to claim the home office tax deduction?
Your home office either serves as your company’s main location or serves as a frequent site for client and customer meetings. This prohibition has some exceptions, including daycare centres and storage facilities.
The requirement that you utilise a certain area of your home exclusively and frequently for your business is the biggest barrier to eligibility for these deductions.
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Generally, to qualify for the home office deduction, you must satisfy one of the following conditions:
The principal site of operation: Either your home office acts as the primary location of your business, or it hosts regular client and customer meetings. There are exceptions to this restriction, such as daycare institutions and storage facilities.
The largest hurdle to eligibility for these deductions is the requirement that you use a section of your house exclusively and frequently for your business.
