Who can take the home office deduction for 2021?
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The real estate market is hot, and home prices are skyrocketing, rents are too darn high, inflation is even hitting your utilities like gas, electric, internet and streaming services. For those of us who have been working from home for the past two years, you may be wondering if you can get a bigger tax break from all these increased expenses? Some of you may be eligible for the Home Office Deduction, while others may be out of luck. Keep reading to find out if you can lower your 2021 taxes with the often-valuable Home Office Tax Deduction.
The Trump Tax Plan Severely Limited the Home Office Deduction
Before the implementation of the Tax Cuts and Jobs Act (TCJA), aka the Trump Tax Plan, millions more Americans were eligible for the tax benefits of the Home Office Deduction. Sadly, for your pocketbook, the home office deduction was eliminated for those of you working as W-2 employees. Even if you work from home 100% of the time, you are not eligible for a tax deduction for your home office expenses. As it stands now, you must have self-employment income to be able to take the Home Office Tax Deduction.
Who Can Take the Home Office Deduction for Tax Year 2021?
You can likely benefit from the home office deduction if you are a business owner or have self-employment income and work from home. The home office deduction can be valuable because it is based on expenses you would likely already be paying. Think mortgage, property taxes, utilities and even home maintenance.
The Home Office Deduction has a reputation for being an audit red flag. However, assuming you are eligible and have kept good records, you should take advantage of the tax-saving from the home office deduction. Again, I must shout, if you are a W-2 employee, you will not be eligible for the home office deduction thanks to the tax plan from former president Trump.