Home Office Deduction Gone

Some of the best news from the tax reform law was an increase in the standard deduction. Whether you qualify for this deduction is determined each year. What tax reform did to the home office deduction tax reform eliminated the employee home office deduction by taking away the ability to claim miscellaneous itemized deductions.

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The simplified method can make it easier for you to claim the deduction but might not provide you with biggest deduction.

Home office deduction gone. Of all the tax breaks available the home office tax deduction is among the murkiest and most misunderstood. Is it really gone for w 2 wage earners. Before the 2017 tax cuts and jobs act almost everyone had the possibility of using the home office deduction on their individual tax return. The regular calculation method allows you to deduct your exact expenses but requires more record keeping.

To claim the home office deduction a home office must be used regularly and exclusively for your business. Telecommuters who used to be able to write off the cost of working from home could face a higher tax bill this year. The home office deduction is not a red flag for an irs audit. With the pandemic many more people are working from their home and i think reviewing the home office deduction would be a good idea.

If you use part of your home exclusively and regularly for conducting business you may be able to deduct expenses such as mortgage interest insurance utilities repairs and depreciation for that area. You need to figure out the percentage of your home devoted to your business activities utilities repairs and depreciation. Using the same figures as above if your home office is 200 square feet the simplified option for the home office deduction would allow you to claim 1 000 200 square feet x 5 as a home office. The tax cuts and jobs act which took effect in 2018 eliminated the ability.

While single taxpayers were only eligible for a 6 350 standard deduction in 2017 that amount nearly. And the passage of the 2018 tax cuts and jobs act has made things even more complicated. Deducting a home office is treated differently depending on your business type. Home office deduction under the trump tax plan if the 2016 election had gone another way under the previous irs provisions millions of more people would be able to take the home office deduction.

There is a simplified calculation method that deducts 5 per square foot for up to 1 500.