Here's who qualifies for the home office deduction on this year's taxes


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If you have been fully remote or a hybrid employee in 2023, you might be interested by the home office deduction for your tax return.

While absolutely distant work is now much less frequent, hybrid positions represented 13.1% of U.S. job postings in December, and almost 20% of all candidates went to these roles, according to LinkedIn.

But should you’re a W-2 employee — which means your employer withholds taxes out of your paychecks — you’ll be able to’t take the home office deduction for 2023 on bills associated to that work, in keeping with licensed monetary planner Eric Bronnenkant, head of tax at Betterment, a digital funding advisor. 

Since the Republican’s 2017 tax overhaul, there’s been no miscellaneous itemized deductions, which have been topic to a 2% adjusted gross revenue limitation. That tax break allowed some W-2 staff to assert a deduction for unreimbursed home office bills, defined Bronnenkant, who can also be a licensed public accountant.

However, you might qualify for the home office deduction for 2023 as a self-employed or contract employee, with earnings reported on Form 1099-NEC, he mentioned.

Your office wants unique and common use

Your home office should meet specific guidelines to qualify for the deduction, mentioned CFP Sean Lovison, founding father of Philadelphia-area Purpose Built Financial Services. He can also be a licensed public accountant.

The office wants unique and common use, and have to be your “principal administrative center,” in keeping with the IRS, reminiscent of a separate room in your home.

Separate buildings might also qualify. “This may very well be a studio, storage, or barn, so long as it is solely and often used,” for enterprise, Lovison mentioned.

How the home office deduction works

If you qualify for the home office deduction, there are two methods to calculate the tax break, according to the IRS.

The “simplified possibility” makes use of $5 per sq. foot of the portion of the home used, as much as 300 sq. toes, for a most tax break of $1,500.

“It can simplify your life in a whole lot of methods” however it could not present the greatest tax break, Lovison mentioned.

By comparability, the “common technique” makes use of the proportion of your home used for enterprise and deducts precise bills, reminiscent of a part of your mortgage curiosity, insurance coverage, utilities, repairs and depreciation.

Regardless of the technique, it’s vital to take care of detailed data of your home office bills and use, as a result of thorough documentation might “substantiate your deduction declare” in the occasion of an audit, Lovison mentioned.



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