Business Use of Home
COVID-19 changed the way millions of people work – practically overnight. Bedrooms became offices, cell phones became office lines and video conferencing apps replaced face to face meetings, all in the effort to stay home and stay safe. Now that you have been working from home for a while, you may wonder if there is any financial benefit other than spending less on commuting and that morning coffee. A tax deduction perhaps? The answer, sadly, is that in 2018 the Tax Cuts and Jobs Act disallowed deductions related to unreimbursed business expenses for those who are classified as employees. However, if you are not an employee and are considered self-employed then depending on the circumstances you may be able to benefit from tax breaks such as the deduction for business use of home.
To figure out if you qualify the IRS has published a chart to assist taxpayers:
Once it is determined that you qualify, there are two options to choose from in calculating your deduction. The first is the Regular Method which allows you to take a portion of your actual expenses based on the percentage of your home that is used for business. The second is the Simplified Option which allows for a $5 per square foot used for business deduction for up to 300 square feet.
If you are unsure if you qualify to deduct your home office expenses and want more information, please contact our professionals at The Innovative CPA Group at 203-489-0612. Or contact us online.