Thursday, July 23, 2020
DON’T EXPECT A HOME OFFICE DEDUCTION FOR EMPLOYEES ON THE 2020 FORM 1040
A post to an email tax preparer group asked -
“Do you guys think the Government will give all these work from home W2 workers a home office deduction this year?”
My answer is NO.
Assuming that the home office in question would qualify – taking into consideration the “exclusive use” rule – why should it be allowed? It does not cost an employee who temporarily works from home due to his "normal" office being closed anything to so do. He, or she, does not incur any “out of pocket” expense – other than perhaps a slight increase in the electric bill.
To be perfectly honest, an employee forced to work at home is actually saving money – i.e. no commuting costs, eating lunch at home every day, and perhaps reduced dry cleaning bills for work clothing.
The traditional home office deduction for a self-employed person – remember that the home office deduction for an employee is an employee business expense and employee business expenses are no longer deductible on Schedule A – applies a percentage of all home expenses, including property taxes, acquisition debt mortgage, homeowners insurance, utilities, security, and depreciation, based on the size of the office.
These costs for an employee forced to temporarily work at home, except perhaps utilities, do not change or increase because he or she is working at home. The mortgage payment, the insurance premium, and the home security bill are the same as they would be if the employee did not work at home.
An employee who works at home may incur additional costs for software or computer upgrades, but these expenses can, and should, be reimbursed by the employer under an “accountable plan”.
This is obviously just my opinion on the issue. It is possible that Congress will allow some kind of modified home office deduction in certain situations, regardless of how stupid and unnecessary it is. Congress has been known to do stupid and unnecessary things in the past.
So, what do you think?