If you’re one of the millions of Americans who've had to swap their office cubicle for a kitchen table, you’ve probably racked up some unusual expenses over the last fiscal year.
Sure, you’ve saved money on your commute, lunches, and dry cleaning (after all, you’re mostly wearing sweats these days), but you've also shelled out for some unexpected costs. Maybe that bar stool you were using as a desk chair did a number on your back, forcing you to spring for something more ... ergonomic. Or maybe your utility bills have gone through the roof now that you’re spending so much time indoors.
The question is, can you write off these things on your taxes?
Rus Garofalo, president and founder of the Brooklyn, N.Y.-based taxed prep company Brass Taxes, says it depends on which state you live in.
Before the Tax Cuts and Jobs Act (TCJA) went into effect, remote employees were able to deduct all of the unreimbursed expenses that freelancers do. In 2017, the bill was passed to lower both individual and corporate tax rates and, now, only a select group can take advantage of these itemized deductions at the federal level.
The good news is that if you live in Alabama, California, Hawaii, Arkansas, New York, Pennsylvania, and Minnesota, you can still claim some of these deductions when you file your state taxes this year — which, for many taxpayers, could lead to a bigger return. Deduction limits vary by state, but Garofalo says that for the most part, both limits and requirements mirror those established by the IRS pre-TCJA.
Here’s a list of what’s allowed.
If you’re using an area of your home exclusively to work — whether that's a shed in the backyard or a dedicated office — you may be able to deduct it.
“The word exclusive is very important,” Garofalo says. “It just can't be sometimes business, sometimes personal.” (If you’re using your kitchen table as a stand-in desk, or an ironing board in the middle of your living room, that doesn't count, he says.)
To claim this space in your taxes, you’ll need to measure the area of the room and determine what percentage of your home it represents. Based on that percentage, calculate how much of your rent or mortgage it accounts for. If you own the property, you can also claim that percentage from the overall value of the house as a “depreciation” deduction.
While you can’t include any miles that were part of your regular commute, you certainly can claim this deduction if, for example, your employer asked you to drive to a meeting or seminar that’s outside of your metropolitan area.
You can also deduct any round trips to a work facility that isn’t your usual workplace — like an impromptu coworking space. If you’ve been using your car to run errands related to your job, like making deliveries for your employer, you may also be able to claim that mileage.
“Generally, the rule is, if it's a necessary and ordinary expense related to your W-2 job, then you can deduct it from your taxable income,” Garofalo says.
So if you had to buy a scanner to file some paperwork, a computer to perform your daily tasks, or anything else that would otherwise be available to you at your office, those are things you can write off.
Hot tip: If you happened to pay for any of these expenses on a credit card, or through a personal loan, the interest accrued on those purchases is also deductible.
Travel and meals
Business travel fell by 70% last year, according to the U.S. Travel Association. But in the unlikely event that you had to fly out to a conference, seminar, or to tend to any other business matters, you may be able to deduct your airfare, car rental and lodging expenses, regardless of the amount.
Likewise, if you had any meetings with clients over lunch or dinner, or with anyone else for the sole purpose of promoting or benefiting your employer’s business, you can also claim this. However, business meals are typically limited to a 50% reimbursement.
Cell phone, internet and utility bills
So, your boss wants you to attend a kazillion Zoom meetings a week, or be on the phone with clients all day? Here’s some good news: You can add your cell phone and internet bills to the list of things you can deduct from your state taxes.
Other utilities, like power and water, will be trickier to include if you don’t have a designated office space in your house. But if you do, Garofalo says, you can claim a percentage as part of your home office deduction.
Subscriptions and memberships
Okay, so you can’t write off your Good Housekeeping subscription, but you can write off a subscription to Adobe Illustrator — if you’re a graphic designer, and you need the program to do your job.
You can also deduct membership fees to any professional associations related to your W-2 job. If you work in real estate, you can deduct the fees you pay to the National Association of Realtors. If you're a CPA, you can deduct your annual membership to the American Institute of Certified Public Accountants (AICPA). And so on.
Same goes for online certificates and continuing education programs, which the pandemic brought a spike in. If you took any of these courses, and they were directly related to your current position, you may be eligible for a tax deduction.
A final piece of advice
It's worth mentioning that even if your state allows you to claim these itemized deductions, it might not be in your best interest.
According to Garofalo, it only makes sense to itemize if the total amount of your combined deductions surpasses what you'd get if you took the standard deduction.
When in doubt, contact a tax preparer in your state — ideally one who knows the ins and outs of your particular industry — before filing.
"That tax preparer should save you more than they cost," Garofalo says.
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