With COVID-19 shutting down or significantly reducing the number of employees allowed inside office buildings, many employees are now getting a taste of what it’s like to be full-time work-at-home employees. It’s been an adjustment for many — in both good ways and bad. As employees try to work around kids’ schedules and spouses who are also working from home, many are looking forward to the home office tax deductions they’re planning on taking at tax time.
But not so fast!
According to the IRS, employees working from home for their employer — meaning they get a W-2 from their employer — are not eligible to claim deductions for home office-related expenses. These employees may ask employers to reimburse costs such as internet service, cell phone service, and office supplies. Some employers will comply, but they’re not obligated to do so. This means that many company employees working from home because of the pandemic are out of luck.
A Little Background
In 2017, deductions for most business-related expenses not reimbursed by an employer were eliminated from an individual’s tax return. Further cuts were made in 2018 when the Tax Cuts and Jobs Act suspended write-offs for miscellaneous deductions that were formerly subject to the 2%-of-AGI rule. Since these most recent cuts extend into 2025, employees working from home cannot deduct home office expenses for 2020 under current tax laws.
Things Are Different Now
Of course, that was then. This is now. Now we’re in the middle of a pandemic with nearly 43% of the workforce being required to work from home because offices are shut down. Many workers have had to incur expenses to set up their home office and computer systems to comply with employers’ business practices. A situation that was anticipated to last a month or two has gone on for nearly a year.
Is There Any Help In Sight?
Some tax experts are starting to make noise about this issue. An article in the Kansas City Business Journal suggests that perhaps a special work-from-home tax deduction is in order for employees who fall into this category. Another article on MarketWatch.com posits that Congress may grant additional COVID-19-related tax relief in future legislation. Neither of these ideas has caught on with legislators yet, but given the state of flux in the status of PPP loans and forgiveness issues, it’s not unreasonable to think that tax laws could be changed to give employees who are forced to work from home some relief.
Until Then…
For now, keep up with your bookkeeping and filing of receipts. If you need help getting your taxes together for 2020 or have questions about how the pandemic has impacted you and your business, give Adams Accounting Solutions a call at 913-888-9100. We’re always here to help!
