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If you worked remotely in 2024, you may be eyeing the home office deduction. However, qualifying for the tax break may be harder than you expect, experts say.
Only 7% of companies allowed fully remote work in 2024, down from 21% in 2023, according to a ZipRecruiter survey that polled 2,000 employers in September and October. But 40% of companies support hybrid work arrangements, the survey found.
However, if you’re a W-2 employee — meaning your company withholds taxes from your paycheck — you can’t claim a tax break for 2024 home office expenses, according to certified financial planner Malcolm Ethridge, founder and managing partner at Capital Area Planning Group.
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Before 2018, W-2 employees could claim certain unreimbursed work-related costs, including home office expenses, via “miscellaneous itemized deductions.” But that tax break was eliminated through 2025 via President Donald Trump’s 2017 tax cuts.
For 2024, you could still be eligible for the home office tax deduction with contract or self-employed work, whether you rent or own your home, explained Ethridge, who is also an enrolled agent.
To qualify, you must have a dedicated space used “regularly and exclusively” for business, according to the IRS. The space could be part of your home, such as a separate room, or another structure on the property.
How to calculate the home office deduction
There are two ways to calculate the home office deduction: the “regular method” or “simplified option,” according to the IRS.
The “simplified option” is a flat rate of $5 per square foot of the part of the home used, up to 300 square feet, for a maximum of $1,500.
By contrast, the “regular method” deducts actual expenses based on the percentage of your home used, such as part of your mortgage interest, insurance, utilities and repairs. This could also include depreciation, which subtracts a portion of your home’s value over time.
While it’s more complicated, the regular method can lead to “pretty substantial savings” in some cases, said CFP Neil Krishnaswamy, president of Krishna Wealth Planning in McKinney, Texas.
However, if you use the regular method, you could face “depreciation recapture” when you later sell your home for a profit, Ethridge said. This can trigger taxes on the depreciation previously claimed or that could have been claimed, which can be a “nightmare,” he said.
Regardless of whether you use the simplified option or the regular method, record-keeping is important, experts say. Otherwise, the deduction could be disallowed following an IRS audit.