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Coronavirus, Home Coworking, and the Home Office Deduction

Author: Kelley Treon, March 26, 2020


I am writing this from home on a Wednesday at 11AM. I should be at my Worthington office having my midmorning coffee. Instead I’m at my kitchen island trying to block out my husband’s spirited conference call taking place in our loft. I could go in the den and close the door, but from here, I can see the back yard. It’s sunny and spring buds are starting to pop. Also, I can hear him from the den even with the door closed! Many people who have always gone to a traditional office for work are in a new situation. For many of us, this will be temporary and in a short time (in the scheme of life) we’ll be back at our regular workplace.


In the meantime, it seems topical to review the home office deduction. Let’s go over the basics of current tax law:


  • Tax reform of 2017 eliminated the home office deduction for employees. Employee home office expense used to be a miscellaneous itemized deduction. Miscellaneous Itemized Deductions were eliminated, therefore, no home office deduction.


  • Independent contractors, certain statutory employees, and self-employed individuals can claim a home office deduction if the home office qualifies. Actual expenses related to the dedicated space in your home used solely and exclusively for business purposes may be deducted. Or, you can use a simplified method by multiplying $5 times the square footage up to 300 square feet. The deduction is calculated on Form 8829 which flows to Schedule C.


If you are an employee temporarily working from home, the current tax law doesn’t help you much. Hopefully, any incremental expenses you are incurring by having to set up shop in the guest bedroom or a corner of the basement will be reimbursed by your employer. That’s better than a deduction anyway because it reduces your outlay dollar for dollar.


Keep watching the news for changes. Congress is putting together a stimulus package. The IRS has already extended the due date for filing and paying (both balances due for 2019 and 2020 estimates) to July 15, 2020. By the way, that’s an automatic extension. No need to file anything to get it. There may be more tax relief coming, and I wouldn’t be surprised if the IRS tweaks the home office rules to address the vast number of people whose primary workplace is now their home.


As always, consult with your tax advisor to see how any changes in your work location may affect your 2020 tax return.


Kelley Treon, CPA- Principal

Lonicera Management, LLC

ktreon@lonicerainvestments.com

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