8922 / Are remote workers entitled to claim a federal tax deduction for home office expenses?

Prior to 2018, an itemized deduction was available for work-related expenses associated with the trade or business of being an employee. The 2017 tax reform legislation eliminated the deduction for “employment expenses” for 2018-2025.

Under current law, therefore, traditional W-2 employees cannot deduct their home office expenses regardless of whether they would otherwise qualify for the home office deduction if they were self-employed.

Planning Point: Under federal FLSA rules, employers cannot require employees to pay for work equipment and other unreimbursed expenses if that would cause the employee’s income to fall below the federal minimum wage or salary thresholds ($7.25 per hour or $684 per week).¹

Further, many states require employers to reimburse employees for certain remote work expenses.² A federal district court judge in California denied a motion to dismiss a proposed class action lawsuit against Amazon. The lawsuit focuses on whether Amazon was required to reimburse the employees for expenses related to work-from-home requirements. The employee in this case alleged that state employment laws required Amazon to reimburse employees for work-related expenses incurred because of pandemic-related work-from-home requirements after the California governor issued lockdown orders. The expenses at issue here include electricity, Internet and space-related expenses totaling between $50 and $100 per month.³

Planning Point: While the federal tax deduction is currently unavailable, some states, including California, provide a state-level deduction for unreimbursed employee expenses.

Self-employed taxpayers can deduct expenses associated with maintaining a home office on Schedule C if the office is used regularly and exclusively as the taxpayer’s principal place of business (if the office is within the dwelling unit). A home office deduction is permitted for self-employed taxpayers with separate structures if the office/workspace is used “in connection with” the trade or business.⁴

See Q 8741 for more information on calculating the value of the home office deduction.

1.  https://www.dol.gov/agencies/whd/flsa (last accessed Sept. 30, 2024).