Remote work rebates: Explaining work-from-home tax deductions

Remote work is no longer just a trend – for millions in countries like the United States, it’s the new normal. According to the U.S. Bureau of Labor Statistics, at least 35% of employees telecommute part-time or full-time, and some reports suggest that over 90% prefer a fully remote or hybrid model. 

Beyond the convenience remote work offers, it also has financial advantages, such as potential tax breaks for those who qualify. Here, we’ll explain some of the most common work-from-home tax deductions and how to claim them.

Who qualifies for work-from-home tax deductions?

Working from home doesn’t automatically qualify you for work-from-home tax deductions. You can claim these tax benefits only if your employment status qualifies and, for the home office deduction, your home office use meets IRS requirements outlined in Publication 587 (Business Use of Your Home).

The home office deduction applies only if a designated space in your home is used regularly and exclusively for business purposes – it can’t be a shared or multipurpose area. Generally, self-employed individuals, such as freelancers and independent contractors, may qualify if their home office is their principal place of business. This also applies to sole proprietors and partnerships operating a business from home.

However, W-2 employees can’t claim home office deductions on federal taxes under the Tax Cuts and Jobs Act of 2017, which suspended deductions for unreimbursed employee expenses from 2018 through 2025. Even if an employer requires remote work and doesn’t reimburse work-related expenses, the IRS doesn’t allow home office deductions.

That said, some states – including California, New York, Pennsylvania, Alabama, Arkansas, Hawaii, and Minnesota – still permit deductions for unreimbursed work expenses on state tax returns. This list may change, so verify your state’s rules. Since eligibility and deduction rules differ by state, a CPA or tax professional can clarify what applies to your situation.

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Common remote worker tax deductions

Although home office space is the primary factor when claiming work-from-home deductions, it’s not the only eligible expense. Depending on an individual’s profession and annual expenses, there may be additional ways to reduce taxable income while working from home.

Write-offs for home offices

Any dedicated space used regularly and exclusively for a self-employed business may qualify for a tax deduction. To calculate a home office tax deduction, taxpayers have two options: the simplified method or the regular method.

The simplified method calculates the deduction by measuring the square footage of the space used for business and multiplying it by $5, with a maximum limit of 300 square feet (or $1,500). 

In contrast, the regular method determines the deduction by allowing a full deduction for direct expenses (e.g., repairs solely for the office) and applying the business-use percentage to indirect expenses such as rent, mortgage interest, and utilities. While the regular method may result in a larger deduction, it requires maintaining detailed records to substantiate the claim.

Meals and travel costs for business

Working from home doesn’t mean all business activities take place at a home office. Sometimes, business owners and self-employed individuals need to travel or dine out to meet with clients or handle work-related tasks. In these cases, transportation, lodging, and meal expenses may be deductible, provided they're directly related to the business. 

The IRS generally allows taxpayers to deduct 50% of meal expenses and, if the trip is primarily for business and away from the taxpayer’s tax home, a portion of travel costs such as transportation and lodging.

Deductible business-related costs

This broad category includes ordinary and necessary expenses for operating and expanding a work-from-home business. Examples include advertising and marketing (e.g., website development or social media ads) and professional development courses or certifications that are directly related to the taxpayer’s business. 

Costs associated with attending professional conferences or subscribing to trade publications related to the business may also qualify for a deduction.

Tools, equipment, and utility costs

Work-from-home professionals may incur various expenses that qualify for deductions. Office supplies, such as paper, pens, and small, low-cost tools, are typically deductible in the purchase year. Additionally, a portion of home utility costs, such as electricity, internet, and phone bills, may be deductible based on the percentage of the home used for business. 

Larger items, such as computers, specialized equipment like ASIC devices for crypto mining, and office furniture, are generally depreciated over their useful lives. However, certain tax provisions, like IRC §179 or bonus depreciation, may allow for faster deductions, subject to specific limits and conditions.

Licensing fees and associated expenses

If a business requires legal licenses to operate, any application or renewal fees may be tax-deductible. This includes business permit costs and certification renewals. If a company carries specialized insurance (e.g., liability or errors and omissions coverage), those expenses may also qualify as deductible business costs under IRS guidelines.

Where to file work-from-home tax deductions 

Self-employed individuals typically report work-from-home deductions on Schedule C (Form 1040). On Line 30 of Schedule C, enter the total home office deduction using either the simplified or regular calculation. Those using the regular method must also complete Form 8829 to break down direct and indirect home office expenses.

Other business deductions related to work-from-home expenses, like office supplies, internet, and utilities, are reported on Schedule C under the appropriate expense categories (e.g., travel and meals on Lines 24a and 24b, utilities on Line 25 if not included in the home office deduction). 

In addition to entering this information on the tax form, taxpayers should maintain supporting documentation for each expense to create a clear audit trail. Again, if you’re unsure whether to claim work-from-home tax deductions, consider consulting a CPA.

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Disclaimer: This post is informational only and is not intended as tax advice. For tax advice, please consult a tax professional.