Many companies have started to bring employees back to the office this year. However, there has been an uptick in COVID-19 cases and even more variants.
This has left thousands of employees to stay home and avoid possibly contracting the virus.
2021 is coming to an end, and after many have spent the year working from home, it’s time to check is the deduction for working from a home office applies to you.
Related: 4 major changes for the 2021 tax season, including reintroduced penalties and cash increases
Homeowners and renters can claim the home office deduction.
This applies to all types of homes and you aren’t required to have a dedicated room as an office.
Eligibility for a home office tax deduction
In order to make this claim on your taxes, you must be self employed or own your own business.
Regular employees may not claim this deduction.
There are two requirements to make the claim.
The first is that you regularly use this space in your home exclusively for conducting business.
Related: 10 tips to get the most out of your tax refund next year
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This can be a dedicated desk in a corner of your living room or an entire office.
You need to prove that your home is used at the principal place of business.
If you still do business outside of your home, but use your home a substantial and regular amount to complete business, it may still work for a home office deduction.
If you use part of your home for business and meet these requirements, you may qualify.
Renting a hotel room for business does not count.
Related: You may be getting a smaller tax refund next year, here’s why
How much is the deduction and how do you claim it?
To make the claim you can choose between the simplified or regular method for the tax year.
If you choose the simplified method, that means you can claim up to $1,500 based on the square footage of your office.
This means that space is strictly used only for business. If it’s an extra bedroom guests sleep in, it does not count.
The gross income from the business cannot exceed the deduction minus business expenses.
Related: How 2022 federal income rates work
The regular method deducts the exact value of expenses. If you choose this way you must maintain records of spending.
If you choose the simplified method to make the deduction, then you will use the Simplified Method Worksheet from the Schedule C instructions.
You need to write the value of your deduction on line 30 of Schedule C.
If you choose to use the regular method, then you need to use Form 8829 in order to calculate the exact amount for the deduction.
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