Millions of Americans worked remotely in 2021 thanks to Covid-19, but most won’t be able to write off any expenses on their taxes.
That’s because of the Tax Cuts and Jobs Act that passed in 2017, which in addition to cutting taxes for many wealthy individuals, also changed what taxpayers are able to deduct. Under the law, workers who receive a W-2 from their employer are unable to include any itemized deductions for business expenses.
That means that if you turned a room into a home office or bought office equipment with your own money after your job sent you home, you cannot write it off.
The IRS clarified the rule-change in the summer of 2020 when large swaths of the country were in the midst of an intense lockdown, saying that “employees are not eligible to claim the home office deduction.”
At the time, eliminating the deduction was not something that was anticipated to impact so many Americans, Ryan Losi, a certified public accountant and executive vice president of PIASCIK, tells CNBC Make It.
“Obviously, that was well before the pandemic that would change the way in which people work and where they work and how they do their work,” he says. “At that point in time, it was just a decision from a revenue raiser standpoint in order to balance the scorecard to get the bill passed.”
The only Americans who will be eligible for the deduction are those who are self-employed, gig workers or independent contractors, CNBC previously reported.
The ban on W-2 employees claiming home-office deductions on their taxes will expire after the 2025 tax year.