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How to Maximize Your Home Office Deductions


Working from home is no longer just limited to freelancers and other self-employed individuals. Thanks to the coronavirus pandemic, many people spent 2020 using their residences as their offices. But what does the IRS allow in terms of deductions on your 2020 taxes?

May 6th 2021
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I often receive queries from freelancers, consultants and other kinds of self-employed individuals who use their homes to run their businesses and ask how to take maximum advantage of the IRS’s complex rules for deducting home-office expenses. In particular, they want to know which write-offs are okay and which aren’t.

What follows in this first of ­three columns is my advice to a former employee of a major corporation who became her own boss, someone I’ll call Abigail.

Like lots of other outfits disrupted and damaged by Covid-19, Abigail’s struggled to survive the pandemic. Its Stepford-solution: cut costs, mostly by discharging her and many of her co-workers.

Like lots of her co-workers, Abigail was uncertain whether and when her employer would extend a post-pandemic invitation to return. Her solution: become a self-employed consultant and use some of her home to conduct business. At the outset of our conversation, I asked Abigail to compare old working days as an employee with new ones as a consultant.

A day in the life of employee Abigail: exasperating experiences like: daily commutes that became nightmares, worsened by sizable sums spent for gas, tolls and parking; executives ever eager to explain how an attractive woman like Abigail should dress and to hector her to remain enthusiastic throughout interminable office meetings; and constant distractions caused by annoying co-workers.

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Replies (2)

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By [email protected]
May 7th 2021 19:37 EDT

Employee home-office is still deductible on many states state income tax returns though. One can save a bunch in CA by claiming this deduction.

Maria U. Ku, CPA
Oakland, CA

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By Julian Block
May 10th 2021 13:36 EDT

Helpful comment. Feel free to submit more responses to my future columns.

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