Issue link: https://nest.uberflip.com/i/1352353
Can W-2 employees claim a home office tax deduction? If you are a W-2 employee, you cannot claim a home office tax deduction. Why not? While in the past employees could claim a deduction for employment expenses over a certain percentage of their income, the 2018 Tax Cuts and Jobs Act eliminated these deductions from 2018 to 2025. The act now prevents full-time, W-2 employees from deducting home office ex- penses on their 2020 taxes even when they worked from home more than they did in the office. There is one small exception to keep in mind: If you're a W-2 employee with a side hustle, you can deduct eligible home office expenses for that particular side gig. Are there any home office tax deductions W-2 workers can claim? Unfortunately, most employees work- ing from home can't claim any federal tax deductions connected to being a remote worker during the coronavirus pandemic. WFH tax deductions companies can take—then reimburse you Even if you're a W-2 employee who can't reap any tax benefits from a home office directly, there are still some ways you can save money—by asking your employer to take some tax breaks on your behalf, then reimbursing you. There is something called Section 139 where the employer can reimburse pan- demic costs for employees, at their discre- tion, tax-free. You can ask for reimburse- ments or special stipends directly from your employer. Section 139 defines those expenses as "reasonable and necessary" costs incurred by employees due to the pandemic. This can include everything from costs associ- ated with establishing a home office (buy- ing a desk) to maintaining a home office (upgrading to a faster internet). These pay- ments are fully deductible for companies, offering a win-win situation for both em- ployer and employee. You can also ask if your company would consider an "accountable plan" for the 2021 tax year. Here's how an accountable plan works: Instead of being paid $50,000, your employer could pay you $45,000 in wages plus a $5,000 home office expense reim- bursement, making your salary the same— while saving you on taxes. Finally, business meals from restaurants (including takeout) may now be deduct- ible under the Consolidated Appropria- tions Act 2021, signed into law on Dec. 27, 2020. While still subject to clarification by the Treasury and IRS, it seems that food and beverages provided by an employer for virtual or business meetings will be 100% deductible. An employer could also deduct food provided for employee virtual happy hours. So this might be a way to get your employer to start covering more of your WFH food if you order in. Simply point out to your em- ployer working meals are a great tax deduc- tion for them, and ask them to put delivered meals on their tab. It never hurts to ask!