Can Remote Workers Claim a Home Office Deduction? It's Complicated

Don't assume that tax break is something you're eligible for.

Before the pandemic, remote work was something only a small percentage of people could take advantage of. But between 2019 and 2021, the number of people primarily working from home tripled from about 9 million people to 27.6 million people, according to the U.S. Census Bureau.

If your home is where you primarily do your job from, then you may be wondering if you'll be able to write off a home office on your tax return. The answer? It depends on the type of employee you are.

What's your status?

To claim a home office deduction, you cannot be classified as an employee of another company. Rather, you need to be classified as self-employed. And this is where a number of people risk making a mistake on their tax returns. 

Even if you work from home 100% of the time, if you're on a company's payroll, it means you aren't eligible to claim a home office deduction. And if you take that deduction when you aren't supposed to, it could cause problems with your tax return and delay your refund from hitting your bank account.

Do you qualify for a home office deduction?

Even if you are self-employed, that doesn't automatically mean you'll be able to claim a home office deduction. To qualify for that write-off, you must satisfy two criteria:

1. You must have a dedicated space within your home used solely for work purposes.
2. Your home office must be the primary place you work from.

So, let's say you have a room in your home with a desk, computer, printer, and filing cabinets. There's no bed in there, so it's not a bedroom. The only thing that happens in that room is that you get your work done. That meets the first obligation. But you can't, for example, sit at your dining room table every day working and call that room your home office. That's not the main/sole function of the room.

Meanwhile, let's say you work out of your home office 95% of the time, and you occasionally work for an hour at your local Starbucks to get a change of scenery. That still counts as your office being your primary place of work. But if you rent a desk in a coworking space that you use 80% of the time, and you only work from your home office one day a week, you can't claim the deduction -- even if that room in your home only serves as an office.

Make sure you know the rules

Claiming a home office deduction when you're not entitled to one could complicate your tax situation and cause your return to get audited or rejected. And not claiming a home office deduction when you're entitled to one could cause you to lose out on a tax break that could save you money. 

Neither situation is ideal, so it pays to read up on how the home office deduction works before filing your taxes. And if you're not sure, consulting a tax professional is always a good idea.