Looking For a Work-at-Home Tax Break? Here’s the Bad News
Working remotely has its costs — think of new laptops, ergonomic chairs and high-speed internet — and it’s tempting to think of them as potential tax write-offs.
Unfortunately for most employees, or anyone who receives a W-2 form, that’s a fantasy. The 2017 tax law eliminated the federal write-offs previously allowed for unreimbursed business expenses and home offices, along with most other miscellaneous itemized deductions. The thinking was that a doubling of the standard deduction would help offset the pain of ending or capping itemized deductions, but that was before the coronavirus.
A very few lucky employees such as struggling performing artists can still qualify for a business-expense tax break, but it's a narrow group and it seems unlikely that the U.S. Congress will widen it.
Some states, including New York, California and Pennsylvania, still allow employees to take deductions for unreimbursed business expenses on their state tax returns. But there may be restrictions on the state deductions — the expenses may have to total more than a certain percentage of income, or taxpayers may have to earn below a specific threshold to qualify.
Given the tax limitations, the best way for employees to recover what they’ve had to spend to work remotely may be to negotiate with their employers. The federal tax code lets employers reimburse employees for costs that are reasonable and necessary for them to do their jobs amid a disaster, and the Internal Revenue Service has said the pandemic qualifies. While the IRS doesn't provide a list of acceptable expenses, reasonable interpretations include home-office and child-care costs.