Had been you planning to deduct your entire home workplace prices from 2020? Assume once more: For the 12 months that extra People than ever labored from home, home workplace prices usually are not deductible on taxes. Because the IRS explains, “staff who obtain a paycheck or a W-2 solely from an employer usually are not eligible for the deduction, even when they’re at present working from home.”
Table of Contents
- Wait, whaaa?
- So earlier than 2018, I would’ve been in a position to deduct my home workplace prices?
- Who can nonetheless take the home workplace deduction?
- Is that this deduction beneficial?
- What proportion?
- How can I take the deduction in 2021?
- So I can do a one-day gig as an unbiased contractor, and deduct a 12 months of home workplace prices?
Sorry to say, however in the event you spent the final 12 months working from home as a full-time worker, that nifty new standing desk and tippy stool aren’t deductible. You possibly can thank former President Trump: His Tax Cuts and Jobs Act of 2017 paused the home workplace deduction from 2018-2025.
So earlier than 2018, I would’ve been in a position to deduct my home workplace prices?
Sure. It’s known as the “enterprise use of home” deduction, and it additionally contains makes use of corresponding to daycares.
Who can nonetheless take the home workplace deduction?
Impartial contractors, self-employed taxpayers, and gig economic system employees can nonetheless take it. They must “use a portion of the home solely for conducting enterprise on a daily foundation, and the home should be the taxpayer’s principal workplace.”
Is that this deduction beneficial?
Hell, sure. Deducting workplace tools will not be what makes it beneficial. Employees can deduct a proportion of their actual property taxes, hire or mortgage curiosity, utilities, insurance coverage, and upkeep and repairs. I know! This nearly makes up for the racket that’s self-employment tax.
The proportion of their home that’s dedicated to only-business use. It’s a selected boon for folks paying excessive city hire on small areas, who can legitimately argue that, say, 41% of the area is workplace area. There are, nevertheless, some complicated depreciation points concerned.
How can I take the deduction in 2021?
Take on some freelance (W-9) work. Right here’s how you calculate the deduction.
So I can do a one-day gig as an unbiased contractor, and deduct a 12 months of home workplace prices?
Noooooo. The quantity you deduct cannot exceed your total income from the freelance business. So in the event you earn $2,000 educating hula-hooping on YouTube, your deduction for hire/insurance coverage/hula hoop/and many others prices can not exceed $2,000.