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One of the deductions that was eliminated with the Tax Cuts and Jobs Act of 2017 was the home office deduction. Prior to TCJA, employees could deduct from their income a portion of expenses such as interest, property taxes, insurance and utilities. They were deductible as an itemized deduction along with any other employment expenses not reimbursed by their employer. Under the new law, the home office deduction is allowed only as a business expenses for businesses that are run out of the home. It is not deductible for employees anymore.
The coronavirus pandemic has forced millions of Americans to work remotely from their homes. Many companies plan to keep employees working from home through the end of 2020 and many believe that this trend could become permanent. This raises the question: Should the home office deduction be reinstated for employees?
So far, the Covid-19 relief measures passed by Congress have not addressed the home office deduction for employees but I suspect that this problem must be on lawmaker’s minds. Employees have had to alter their lifestyles to conform to the “new normal” and, therefore, have a good case to make for bringing back this tax break.
In the meantime, one possible solution is for employers to reimburse employees for home office usage. These reimbursements would be deductible by corporations and not included as income to the employees. My firm will continue to monitor this situation for possible legislation down the road.
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David K. Raye, CPA 704-887-5298 [email protected]