Video: Expenses That Are Tax Deductible When Working from Home
If you’re self-employed, you might be eligible for some tax breaks for working from home. Tax breaks include the home office deduction and deductions for work-related supplies and equipment. Take a look at this video to learn how you can maximize your refund if you work at home to save on your tax bill.
The One Big Beautiful Bill that passed includes permanently extending tax cuts from the Tax Cuts and Jobs Act, including increasing the cap on the amount of state and local or sales tax and property tax (SALT) that you can deduct, makes cuts to energy credits passed under the Inflation Reduction Act, makes changes to taxes on tips and overtime for certain workers, reforms Medicaid, increases the Debt ceiling, and reforms Pell Grants and student loans. Updates to this article are in process. Check our One Big Beautiful Bill article for more information.
Beginning in 2018, home office deductions and other expenses for employees are no longer deductible as unreimbursed employee expenses.
Video transcript
Are you self-employed and working from home? We’ll break down the home office deduction in this edition of Tax Tips by TurboTax.
The home office deduction allows you to write off expenses related to the business use of your home. Eligible expenses include homeowners insurance, utilities, rent, mortgage interest, property taxes, maintenance costs, and more.
So who qualifies for this deduction?
If you’re self-employed, you can generally claim the deduction if you use part of your home exclusively and regularly as either your main place of business, or a place where you meet regularly with patients, clients, or customers.
If you’re an employee, you generally can’t claim the deduction on your federal taxes, even if you work from home full-time. However, if you have a side business in addition to your regular job, you may be able to deduct home expenses related to your side business.
But how do you calculate the deduction?
If you satisfy all the requirements, there are two ways to calculate the home office deduction.
One: The Actual Expenses Method. Or Two: The Simplified Method.
The actual expenses method uses expenses that are solely for a part of your home used for business and are fully deductible. For example, you can deduct 100% of the costs of painting a room used exclusively for your business.
You can also deduct a portion of expenses related to your entire home, such as utilities, homeowners insurance, or a new roof.
To calculate this, multiply your total home expenses by the percentage of your home used for business.
For example, if you use 5% of your home for business, you can deduct 5% of your total home expenses. You must file Form 8829 if you use this method.
With the “simplified” method, you don’t have to keep track of home expenses. Instead, you multiply up to 300 square feet of space in your home used for business by $5. So, if your home office is 100 square feet, you can deduct $500.
Whichever method you use, the deduction can be limited if your gross income from the business use of your home is less than your total business expenses.
TurboTax asks simple questions to help you determine if you qualify for the home office deduction, ensuring you get the biggest refund, guaranteed.
Visit turbotax.com for more info to help you file your taxes with confidence!
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