Home Office Space and next years Taxes

[Sharon]

Just a random thought from today.  For those of us who have been kicked home to work will be able to take a home office tax deduction when we file our tax returns next year. 

I have never researched this so don't really know the requirements etc.  This was just a random thought that floated through my brain today.

[msventoux]

Not unless the law changes. As it stands now the miscellaneous itemized deductions went away, I think until 2025. That is where employees would report the home office deduction. Plus to get the deduction there was a regular and exclusive use requirement. Business owners still have that deduction as an option though as part of their Schedule C.

[Deleted]

I had the opportunity to use it back when I teleworked- 2 years for a company in TX and one year for a company in KS, when I lived in NJ the whole time.  So- the criterion that it had to be required by the employer was met.  The two reasons that made it a PITA were "exclusive use" and the depreciation recapture.  I certainly used that space for dealing with personal things as well- mostly bill-paying and some personal e-mail in my off-hours.  Depreciation on that part of the home was a deduction but then it would have been "recaptured" (included in taxable income) when sold.  I suppose I could have skipped depreciating it but decided the whole process wasn't worth it.

[bookkeeper]

The home office deduction has historically been one of the areas the IRS flags for audit.

Back in the day, my father in law got pinched over his home office (my mother in law's laundry room).  He really did have a home office, but his record keeping and the square footage he was claiming did not fly with the IRS.  At one point, he wrote a blank check and handed it to the agent and asked her to just go away.

There was no money in the Christmas cards that year. The nice lady from the IRS got it.

[TheOtherMe]

May 21, 2020 8:47:29 GMT -5 bookkeeper said:

The home office deduction has historically been one of the areas the IRS flags for audit.

True statement

[The Walk of the Penguin Mich]

May 21, 2020 10:02:29 GMT -5 TheOtherMe said:

May 21, 2020 8:47:29 GMT -5 bookkeeper said:

The home office deduction has historically been one of the areas the IRS flags for audit.

True statement

TD was told this by his accountant as well.  You have to have a place in your home where you do nothing but work.  As he is set up at the DR table to WFH, this obviously isn’t happening.  Minor reward for the risk, he decided not worth it.

[tractor]

I’ve looked into it, and there’s just too much paperwork and tracking required to justify the small amount of gain. That and the fact that I’m lazy when it comes to separating out actual expenses, etc.

[Bonny]

May 21, 2020 6:36:50 GMT -5 @athena53 said:

I had the opportunity to use it back when I teleworked- 2 years for a company in TX and one year for a company in KS, when I lived in NJ the whole time.  So- the criterion that it had to be required by the employer was met.  The two reasons that made it a PITA were "exclusive use" and the depreciation recapture.  I certainly used that space for dealing with personal things as well- mostly bill-paying and some personal e-mail in my off-hours.  Depreciation on that part of the home was a deduction but then it would have been "recaptured" (included in taxable income) when sold.  I suppose I could have skipped depreciating it but decided the whole process wasn't worth it.

My thoughts as well. I also think it could affect your cap gains exclusion for the sale of your primary residence.

[TheOtherMe]

I can't tell you how many home office deductions I disallowed during the years I audited small businesses.  

The reason was usually it wasn't exclusively used as an office.

Sometimes, there were issues with the allocation of space to the office vs. the rest of the house.