The COVID-19 epidemic has had dramatic financial implications for millions of Americans — driving and turning many corporate employees into remote workers for the foreseeable future. For now, the most well-known employment-related tax deduction — for home office expenses — is reserved for those who are both self-employed and have a dedicated home space for working.
“We know that there has been an increase in the number of people working from home due to the coronavirus,” says Lisa Greene-Lewis, CPA, and tax expert with TurboTax. “In general, only those who are self-employed can take deductions for expenses related to working from home.”
Still, there are a handful of other work-related expenses that both corporate employees and the self-employed may be eligible to claim on their taxes. And it’s worth noting that tax laws change from year to year — and it’s quite possible that the IRS will unveil a host of new tax deductions related to COVID-19, and its impact on remote working, sometime between now and next April.
For now, here’s a list of the work expenses and deductions that you can presently claim.
How to claim work expenses on your taxes: Choose a deduction
Before you start going through every line item of every receipt, you may want to save yourself the trouble and figure out which you’ll take: the standard deduction or the itemized deduction.
Standard deduction: The standard deduction is an all-encompassing flat rate, no questions asked. For tax year 2020, the flat rate is $12,400 for single filers and those married filing separately. The rate is $24,800 for married filing jointly. Taking this route is much easier than itemizing.
Itemized deduction: If you want to claim work expenses, medical payments, charitable contributions or other expenses, you’ll use the itemized deduction. It’s more time-consuming than the standardized deduction — and you’ll need proof of the expenses you wish to deduct.
If you’re going to claim and itemize your work expenses, you’ll need to complete Schedule A of Form 1040. You need to have sufficient proof for each itemized expense, which means tracking down receipts. If your standard deduction is greater than the sum of your itemized deductions, save yourself the trouble and take the flat-rate.
Common tax deductions to claim
Before you start adding up all the line-items, make sure you know what’s covered and what isn’t. Here are some of the most common deductions for folks working from home.
1. Home office deduction
Greene-Lewis says that although the home office deduction may be the largest deduction for self-employed people, many are hesitant to take it. The most significant requirement is that the space be reserved for and dedicated entirely to your work.
“Can you deduct a home office if you work at your kitchen table?'” she says. “Unfortunately, no. You not only have to be self-employed — but have a dedicated space in your home that is exclusively related to your business. You can’t deduct the space at your kitchen table if your family also eats dinner there.”
If you have a dedicated workspace at home, you can use the IRS regular method or simplified option, though you can’t use a combination of them in a single tax year. Some things that qualify for home office deductions:
- Insurance: You can deduct a percentage of your home insurance that covers the business space in your home.
- Utilities: Expenses for utilities, like electricity and gas, can be deducted — but only the percentage used in your home office.
- Depreciation: If you own your home, you can deduct the cost of wear and tear on the portion used exclusively for business.
All of these calculations are based on the percentage of your home that you use for business. To find the percentage, compare the size of space you use for business to that of your entire home, and then apply percentage to the specific expenses. For instance, if your home is 1,800 square feet total, and your home office measures 300 square feet, your home office deductions could be applied at a rate of 16%.
Greene-Lewis says that if you take the simplified option, you can deduct $5 per square foot, up to 300 square feet, or $1,500 total. This would be an alternative to calculating the various individual home expenses.
Regular commutes from your home to work are considered non-deductible personal expenses. If you have to commute between multiple locations or travel for work, however, some of those costs may be deductible. Flights, hotel rooms, rental cars, meals and tips for service are all considered travel expenses. If a passport is required for your travel, you can claim that as well.
In the past, mileage accrued while driving your own car for business travel was an expense you could claim on your taxes — but the Tax Cuts and Jobs Act eliminated that for employees. The self-employed and business owners, however, are still eligible for this deduction.
3. Work uniform
If you have to buy clothes that you only wear for work, you can write off the cost. You can also claim expenses incurred for dry cleaning or laundering work clothes. The deduction cannot exceed 2% of your adjusted gross income.
4. Continuing education and certifications
In some fields, you can claim the enrollment cost of any required continuing education courses, classes or certifications. You can also deduct professional organization dues and fees — as long as the organization isn’t political. And if you’re a lawyer, you can deduct the price of membership for your state bar or any other similar organization.
If you’re a teacher, the Teacher Education Deduction lets you claim up to $250 of out-of-pocket costs related to teaching supplies. And Green-Lewis says if you and your partner are both teachers, you both can claim the deduction.
If you own your own business, you can deduct the cost of some business supplies. And the deduction threshold is generous.
“Self-employed business owners can deduct up to $1,020,000 for qualified business equipment like computers, printers and office furniture,” Greene-Lewis says.