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Coroimage | Moment | Getty Images<\/p>\n<\/div>\n<\/div>\n<\/div>\n
If you worked remotely in 2024, you may be eyeing the home office deduction<\/a>. However, qualifying for the tax break<\/a> may be harder than you expect, experts say.\u00a0<\/p>\n Only 7% of companies allowed fully remote work<\/a> in 2024, down from 21% in 2023, according to a ZipRecruiter survey that polled 2,000 employers in September and October. But 40% of companies support hybrid work arrangements, the survey found.\u00a0<\/p>\n However, if you’re a W-2 employee<\/a> \u2014 meaning your company withholds taxes<\/a> from your paycheck \u2014 you can’t claim a tax break for 2024 home office expenses, according to certified financial planner Malcolm Ethridge, founder and managing partner at Capital Area Planning Group.<\/p>\n More from Personal Finance:<\/strong> Before 2018, W-2 employees could claim certain unreimbursed work-related costs, including home office expenses, via “miscellaneous itemized deductions<\/a>.” But that tax break was eliminated through 2025 via President Donald Trump<\/a>‘s 2017 tax cuts<\/a>.<\/p>\n For 2024, you could still be eligible for the home office tax deduction with contract or self-employed work, whether you rent or own your home, explained Ethridge, who is also an enrolled agent.<\/p>\n To qualify, you must have a dedicated space<\/a> used “regularly and exclusively” for business, according to the IRS. The space could be part of your home, such as a separate room, or another structure on the property.<\/p>\n<\/div>\n There are two ways to calculate the home office deduction<\/a>: the “regular method” or “simplified option,” according to the IRS.<\/p>\n The “simplified option” is a flat rate of $5 per square foot of the part of the home used, up to 300 square feet, for a maximum of $1,500.<\/p>\n By contrast, the “regular method” deducts actual expenses based on the percentage of your home used, such as part of your mortgage interest, insurance, utilities and repairs. This could also include depreciation<\/a>, which subtracts a portion of your home’s value over time.<\/p>\n<\/div>\n While it’s more complicated, the regular method can lead to “pretty substantial savings” in some cases, said CFP Neil Krishnaswamy, president of Krishna <\/em>Wealth Planning in McKinney, Texas.<\/p>\n However, if you use the regular method, you could face “depreciation recapture<\/a>” when you later sell your home for a profit, Ethridge said. This can trigger taxes on the depreciation previously claimed or that could have been claimed, which can be a “nightmare,” he said.<\/p>\n Regardless of whether you use the simplified option or the regular method, record-keeping is important, experts say. Otherwise, the deduction could be disallowed following an IRS audit.<\/p>\n<\/div>\n<\/div>\n\n
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Sen. Elizabeth Warren: FDIC staffing shortages put banking system at risk<\/a><\/p>\nHow to calculate the home office deduction<\/h2>\n
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