The ongoing COVID-19 pandemic has kept countless people working from home for months now. Many have been wondering whether they should consider claiming the home office deduction on taxes next year so we thought we’d pass along some information to help determine whether this may be an option for you.
According to IRS Publication 587, your home must be your “principal place of business” for your trade or business to qualify to deduct expenses for the business use of your home. If you have another “fixed location where you conduct substantial administrative or management activities,” then you do not qualify for the home office deduction.
In other words, if you commuted to an office before March 2020, it’s unlikely you qualify for the home office deduction. If you principally worked from home before the pandemic, you may qualify for the home office deduction. The IRS provides a simple flow chart to help determine eligibility:
Be sure to also check out the IRS website for additional resources on home office deductions.
We recommend consulting your tax professional if you are thinking of taking the home office deduction or want an opinion on your specific circumstances.
(Side note... tax season also means gathering all of your documents needed and getting them in one place to make filing your taxes as easy as possible. We thought it would be helpful to provide our Year-End Checklist to assist as well as refer you to our Tax Resources page for important dates, publications, and tax forms you may need as well. Let us know if there is anything we can help with along the way.)