Summary of the current rule

Under current U.S. tax law (Tax Cuts and Jobs Act changes effective 2018–2025), most employees cannot claim unreimbursed business expenses — including a home office — as an itemized deduction. The suspension removed miscellaneous itemized deductions subject to the 2% adjusted gross income (AGI) floor. That means the common home-office deduction that many self-employed taxpayers rely on is off the table for typical W-2 employees.

Authoritative reference: see IRS guidance on employee business expenses and the home office deduction (IRS Publication 463 and the IRS Home Office Deduction page) for more detail: https://www.irs.gov/forms-pubs/about-publication-463 and https://www.irs.gov/businesses/small-businesses-self-employed/home-office-deduction.

Who can still deduct work-from-home or unreimbursed employee expenses?

A very small set of employees may still deduct certain expenses. These groups can use Form 2106 to report allowable unreimbursed employee business expenses and then claim them on Schedule A (itemized deductions):

  • Qualified performing artists.
  • Fee-basis state or local government officials.
  • Members of the U.S. Armed Forces Reserve (in some circumstances).
  • Employees with impairment-related work expenses (these are allowed whether or not you itemize in some cases; consult IRS guidance).

If you aren’t one of the categories above, you generally cannot take a deduction for home office expenses on your federal return. (Source: IRS Form 2106 instructions and Publication 463.) See Form 2106 info: https://www.irs.gov/forms-pubs/about-form-2106.

How the home office rules differ for employees vs self-employed taxpayers

  • Self-employed taxpayers (Schedule C filers) can claim the home office deduction if the space is used regularly and exclusively for business and either the simplified or regular method is applied. Those rules are explained in IRS guidance for small businesses.
  • Employees who are allowed to deduct expenses face stricter standards: the work space must generally be used exclusively and regularly for work and, importantly, it often must be for the convenience of the employer (not just a personal choice to work from home).

Note: Employees who are eligible to deduct still cannot use the simplified home office method that is intended for self-employed filers; instead, they report expenses via Form 2106 and Schedule A where applicable.

Types of expenses that matter (for those who qualify)

If you fall into an allowed category, expenses typically fall into two buckets:

  1. Direct expenses — costs that benefit only the home office (e.g., a dedicated file cabinet, office paint) and are fully deductible against the home-office portion.
  2. Indirect (allocated) expenses — shared home costs such as rent, mortgage interest, utilities, homeowners insurance, and depreciation. These are prorated based on the percentage of home square footage used exclusively for work.

Keep in mind depreciation and allocation rules can be complex; self-employed filers use Form 8829 for the regular method, but employees must follow Form 2106 guidance and Schedule A reporting procedures.

Practical examples (illustrative)

  • Eligible example: A qualified performing artist who maintains a room used exclusively for rehearsals and work and who is not reimbursed by the employer may deduct a proportionate amount of utilities and supplies under Form 2106.

  • Ineligible example: A typical remote corporate employee who telecommutes from a bedroom-turned-office cannot deduct rent or utilities on federal taxes if they are a standard W-2 employee and not in one of the exceptions above.

These examples emphasize the common audit trigger: claiming a deduction while not fitting the narrow exemption categories.

Recordkeeping checklist

Good records are essential whether you are eligible or seeking reimbursement from your employer:

  • Floor plan or diagram showing square footage of the home and the home office.
  • Receipts and invoices for direct expenses (office equipment, supplies, repairs specific to the office).
  • Utility bills, rent/mortgage statements, homeowners insurance, and property tax records for prorating shared costs.
  • Employer communications about required home work, reimbursements, or policies that might support “convenience of employer” claims.
  • A contemporaneous log showing dates and hours worked (useful if the employer-required test is ever questioned).

For guidance on structuring and documenting expenses, see FinHelp’s article on Documenting Home Office Expenses: https://finhelp.io/glossary/documenting-home-office-expenses-under-current-rules/.

Alternatives and tax-safe strategies for non-qualifying employees

Because most employees can’t deduct these expenses, consider these employer- or state-level solutions:

  • Ask your employer for an accountable reimbursement plan. Under an accountable plan, the employer reimburses documented business expenses and those payments are not taxable to the employee. This is the cleanest route.
  • Negotiate a stipend or de minimis fringe benefit; some employers offer a monthly remote-work allowance.
  • Use health- or employer-provided benefits when relevant (for example, ergonomics equipment sometimes qualifies under a wellness program).
  • For state taxes: a few states have different rules for itemized deductions; check state guidance or consult a tax pro.

If your employer won’t reimburse, document everything and consult a CPA to see whether any narrow exceptions might apply to your situation.

Common mistakes to avoid

  • Assuming the self-employed rules apply to employees. They don’t. The home office deduction’s simplified and regular methods are designed for Schedule C filers.
  • Overstating “exclusive use.” Using a dining table or a corner of a room that’s also used for personal purposes won’t meet the exclusive-use test.
  • Claiming deductions if you’re reimbursed or provided supplies by your employer. Reimbursement eliminates the deduction.
  • Failing to ask for an accountable plan — employers often have flexibility to implement these and may not publicize them.

How audits view employee home-office claims

If you are in an exception category and claim a deduction, expect the IRS to scrutinize:

  • Evidence that the space is used exclusively and regularly for work.
  • Proof that the expense was not reimbursed.
  • Documentation that the home office was required for the job or was otherwise necessary for the employer (for many employee claims, this ‘‘convenience of the employer’’ rule is a key factor).

FinHelp’s audit-focused guide on what the IRS looks for in home-office claims explains common red flags: https://finhelp.io/glossary/what-the-irs-looks-for-in-small-scale-home-office-audits/.

Frequently asked questions

Q: Can I use the simplified home-office deduction if my employer requires me to work from home?
A: No. The simplified method (and Form 8829 regular method) is for self-employed filers. Employees who qualify use Form 2106 and Schedule A where applicable.

Q: Do I need to itemize to claim these expenses?
A: Yes — allowed unreimbursed employee business expenses are claimed as an itemized deduction on Schedule A, but itemizing must still benefit you compared with taking the standard deduction.

Q: What if my employer provides a partial reimbursement?
A: Reimbursements under an accountable plan remove the need (and the ability) to claim those expenses on your tax return. Nonaccountable plan reimbursements are taxable compensation and won’t create a deductible expense for the employee.

Practical next steps

  1. Confirm whether you fall into one of the narrow exception categories. If not, plan to seek employer reimbursement.
  2. Gather good records now — receipts, utility bills, a floor plan — because records are the key to substantiation if you later fall into an allowable category.
  3. Talk to your HR or finance team about an accountable reimbursement plan.
  4. If you think you might qualify, consult a tax professional before filing; Form 2106 rules and the ‘‘convenience of the employer’’ test can be complex.

Professional disclaimer

This article is educational and does not constitute individual tax, legal, or financial advice. Tax law changes occur; consult a licensed tax professional for advice tailored to your circumstances.

Authoritative sources and further reading

Related FinHelp resources:

By keeping accurate records and understanding these limits, employees can avoid mistakes that trigger audits and can pursue employer-based solutions that deliver the same financial benefit without tax risk.