This past week, I read an article by a financial planner that talked about the home office deduction. There was one glaring error and that’s what I want to address today.
No Home Office Deduction for Employees
An employee cannot take a deduction for his or her home office. It USED to be possible, before the Trump Tax Plan (Tax Cuts and Jobs Act) that went into effect 1/1/2018. Back then, if you had to work at home for the convenience of the employer, you could take a miscellaneous deduction on your Schedule A for Itemized Deductions.
But the Trump Tax Plan did away with the miscellaneous deduction. No more home office deduction for employees.
Business Owners DO Get the Home Office Deduction
Business owners can STILL take the home office deduction. So can solopreneurs,independent contractors, gig workers and 1099 workers.
If you’re NOT an employee, you can take a home office deduction. That’s a very big deal.
If you currently are an employee who is working from home and you want to be able to deduct your computer, ISP, utilities, furniture, cell phone, cell phone plan and the like, then you need a business.
Do This NOW Before 12/31/2020
Do you want to take more deductions on your 2020 tax return? You need a business BEFORE 12/31/2020.
You can be an employee and have a business on the side.
Your business can be online, selling on eBay, Facebook, Etsy, Amazon, YouTube or some other online marketplace or social media site. You can sell services. You can sell products. You can sell traffic (advertising and/or affiliate links).
Just get started!
If you do it before year end, you’ll get business deductions you can’t take as an employee. Your taxes will be a whole lot less.