TAX SEASON 2024
Are internet costs tax deductable if you work from home?
By understanding your employment status, you can navigate the tax implications of working remotely and reap the benefits of claiming eligible deductions.
The rise of remote work has redefined the traditional workplace. Many Americans now find themselves tethered to their internet connection for work, blurring the lines between personal and professional expenses. This begs the question: can you deduct internet costs on your taxes if you work from home?
The answer depends on your employment status.
Who can deduct from their taxes if they work from home?
The Tax Cuts and Jobs Act of 2017 suspended the ability for most employees to deduct home office expenses, including internet costs, through 2025. This means that if you receive a W-2 form from your employer, you cannot claim internet expenses on your tax return, even if you work from home exclusively.
However, there’s a silver lining. Some employers offer work-from-home stipends or expense reimbursement programmes to help offset the additional costs associated with remote work. It’s always worth checking with your human resources department to see if such programmes exist.
For self-employed individuals, the picture is brighter. If you’re a freelancer, contractor, or small business owner, internet access is likely a crucial business expense. The IRS allows self-employed individuals to deduct a portion of their home office expenses, including utilities like internet, based on the percentage of their home dedicated to business use.
Calculating your deduction
There are a few key points to remember when claiming internet costs as a home office deduction:
- Exclusive Business Use: The deducted portion of your internet bill must be used primarily for business purposes. If you also use the internet for personal activities, you’ll need to track and separate the business usage for accurate deduction.
- Regular and Exclusive Space: Your home office must be a dedicated and regular workspace, not just a casual work area.
- Simplified Option: The IRS offers a simplified deduction option for home office expenses. This eliminates the need for precise space calculations and allows a flat deduction per square foot of dedicated workspace.