SAN DIEGO — Many people are working from home during these pandemic times. But does that mean you can write off your home office expenses for the 2020 tax year? A local tax expert says, maybe. It all depends on your individual situation. If you own your own business and you're self-employed the easy answer is, yes.
“Self-employed individuals have the ability to write off home office for that type of income. There has been no change federally or state,” said Casey Broach, vice president of DACA Investment Services in San Diego.
For the self-employed, calculating home office expenses is pretty straight forward, according to Broach, who is a certified financial planner.
“That space – on a percentage basis of your total space – is how we would take that deduction. As long as the space for business is exclusive and regularly used for work, then that home-office deduction is more within [your] right to take,” said Broach.
When it comes to W2 employees who are simply working from home, it gets more complicated. The ability to write off home office expenses like utilities, property taxes, and maintenance costs went away in 2018 for federal tax returns.
You still might be able to deduct those work expenses on your California tax return, but only if you have a large amount of itemized deductions, Broach said.
“Go through the process of calculating what those deductions would be, for home office as an employee, because they may still be able to be deductible on the state level,” he said.
Most employed Californians simply take the standard deduction, whether filing single or as a married couple.
Broach said you still want to keep track of home office expenses for the year 2021, just in case tax law changes under the current administration.
“There is a possibility that the rules for the employed, W2 employees could change. Hopefully, they do because that would allow more deductions and hopefully more refunds, which we know likely is needed in this current environment,” Broach said.
Itemizing tax deductions can get pretty complicated, so make sure you consult a tax professional before claiming home-office deductions.