The Internal Revenue Service is reminding Hoosiers who are considering taking the home office deduction to double-check if they qualify. The benefit may allow taxpayers working from home to deduct certain expenses on their tax return.
The home office deduction is available to qualifying self-employed taxpayers, independent contractors and those working in the gig economy. However, the Tax Cuts and Jobs Act suspended the business use of home deduction from 2018 through 2025 for employees. Employees who receive a paycheck or a W-2 exclusively from an employer are not eligible for the deduction, even if they are currently working from home.
There are two basic requirements to qualify for the deduction. The taxpayer needs to use a portion of the home exclusively for conducting business on a regular basis and the home must be the taxpayer’s principal place of business.
Taxpayers who use their home on a regular basis for providing daycare may be able to claim a deduction for part of the home even if it is used as the same space for non-business purposes. To qualify, both of the following requirements must be met:
• The business must provide daycare for children, people age 65 or older, or people who are physically or mentally unable to care for themselves.
• The business must have applied for, been granted, or be exempt from having a license, certification, registration, or approval as a daycare center or as a family or group daycare home under state law