I discussed the availability and requirements of the home office deduction in a previous newsletter. https://magdaabdogomezlaw.com/claiming-home-office-deduction/

The Internal Revenue Service wants those individuals who qualify, to consider taking the home office deduction. The deduction would result in a reduction to the taxpayer’s tax liability.

As a result of COVID many people began working from home in early 2020 and quite a few are still at home. The question is whether these individuals may claim a home office deduction on their 2020 tax return. Most people who ask this question will be surprised to learn that the answer is that they are not entitled to claim a home office deduction.

The home office deduction is available to a taxpayer whose principal place of business is located in their home. Additionally, the home office must be used regularly and exclusively for the business. In order to be carrying on a business, and qualify for the deduction, the taxpayer must be self-employed, an independent contractor or working in the gig economy.

Many of the taxpayers working from home due to COVID are employees. Employees who receive a W-2 from an employer are not eligible for the deduction even if they are working from home. Employees are not involved in carrying on a trade or business. Employee business expenses, such as a home office, were an itemized deduction. However, the employee business expense deduction as an itemized deduction was suspended for years 2018 to 2025 by the Tax Cuts and Jobs Act.