Working From Home During The Pandemic Doesn’t Include Tax Breaks
If you worked from home during part or all of 2020, don’t expect that to help reduce your tax bill come April 15.
Working from home, until a few years ago, meant a tax break. You could write off furniture, equipment, supplies and, in some cases, part of your rent or mortgage and utilities.
That ended in 2017 when the Tax Cuts and Jobs Act removed the deduction for most people.
“Lots of us have purchased computers or chairs specifically for the purpose of being able to work from home,” said Michele Meckfessel, an accounting professor at the University of Missouri-St. Louis who specializes in taxes. “But unless you are self-employed, those items will not be deductible.”
Meckfessel said her rule of thumb is if you worked for someone else and received a W-2 for your wages, your work-from-home space during the pandemic is not tax deductible.
“As far as taxing bodies are concerned, as an employee of a company, a home office is just an extension of the work office,” Meckfessel said.
That also means that workers who usually go to an office in St. Louis but worked from home outside the city during the pandemic will still have to pay the city’s earnings tax.
Tax advisers say there will be no refund, and their clients should prepare state and federal taxes accordingly.
“Because you are operating remotely from an office that is located in St. Louis City, you are still liable for those local taxes related to St. Louis City,” Meckfessel said.
While those are the rules in place right now, they may become the focus of legal action in the future. Some cities that collect a local income tax for people who work within its borders, including Kansas City, Mo., are allowing for refunds because of the pandemic’s mandate to work from home.
Working from home also will not affect the taxes of people who work in one state but live in another.
“Let’s say you work in Missouri but you live in Illinois. Even if you’ve been working from home in Illinois, you are working from a remote location from a place that is in Missouri,” Meckfessel said. “Your payroll taxes will be withheld in the state where your employer is located, even if you haven’t been there since March.”
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