Deductions for Employee Expenses (working from home)

With COVID, many employees are now working out of home. We’re receiving lots of questions on the deductibility of home office expenses and the like. See below for a recap on how these deductions work!

​IRS Changed the Rules in 2018
With tax reform a couple years ago, the IRS disallowed the deduction of unreimbursed employee expenses starting with the 2018 tax year filing. So the IRS does not allow any benefit for employees as far as deducting home office expense, mileage, supplies, etc.
 
CA Made No Changes
CA did not conform to the IRS tax reform changes and still allows the deduction. However, the deduction is only beneficial for those who itemize…and only after the expense amount exceeds 2% of your income.
 
For instance, a taxpayer earning $50,000 would need $1,000 in unreimbursed employee expenses to even be able to claim the deduction. Then, because it’s an itemized deduction, you would only benefit if your total itemized deductions exceed your standard deduction.
 
So for most, the figure doesn’t add up to a net deduction. However, you should still provide your tax preparer with this info so he/she can do the math for you! But if it’s a hassle for you to come up with the info, it may be best not to bother (especially since it could only benefit with CA and could result in depreciation of your home).
 
Click here for more info on deducting employee expenses.