As a telecommuting employee, a home office deduction may seem like a good idea. After all if you meet the IRS requirements for a home office deduction, then why shouldn't you take a home office tax deduction?
But the question of whether to take a home office deduction is always a complicated one. And if you are a telecommuting employee (as opposed to a self-employed business owner or freelancer), it is even more complicated because additional rules apply to you when it comes to an employee's home office tax deduction.
Telecommuting Employees vs. Self-Employed
When you are a telecommuting employee, not an independent contractor, you must meet additional requirements over and above the usual requirements for home office tax deductions, such as using the home office space regularly and exclusively for business.
Telecommuting employees must be using their home offices for their employer's convenience, not for their own. So if you are a virtual call center agent, employed by a company that saves money on office space by hiring agents to work from home, then you would likely meet this particular requirement.
If your employer allows you to work from home--even though it has office space available--so that you can avoid a long commute, you would not qualify.
But keep in mind that, even if you work at home for the convenience of your employer, you can't rent part of your home to your employer and then use that area to work for your employer and still claim the home office deduction.
How to File for Home Office Tax Deductions
If you are a telecommuting employee that is qualified to take the home office deduction, use Form 2106 to calculation the deduction and then enter it on line 21 of Schedule A (Form 1040). This means you must itemize and cannot take the standard deduction if you wish to take a home office deduction.
It also means that can only deduct the portion of your unreimbursed business expenses, which include things like mileage, traveling costs, home office expenses, business gifts, education (tuition, fees and books)and trade publications, that is greater than 2 percent of your adjusted gross income. So for some the expenses may not be enough to be deducted at all.
If you are an independent contractor, use IRS Form 8829 to calculate your home office tax deduction filing a Schedule C.
Explore more issues related to home office tax deductions on this Home Office Deduction FAQ.
I am not a tax attorney, CPA or tax preparation specialist. The information here is meant as a general guide. For specific questions about your own taxes, please refer to IRS publications or consult a tax specialist.