Tax Deductions for Remote and Hybrid Workers: A Checklist

Introduction

Remote and hybrid workers often have extra, work‑related costs that can lower their tax bill—but only if the expenses meet IRS rules and you claim them correctly. This checklist is written for U.S. taxpayers in 2025 and focuses on federal rules: many states have their own treatments. It distinguishes self‑employed taxpayers (who generally have the broadest options) from W‑2 employees (whose ability to deduct unreimbursed work expenses is limited by federal law). (See IRS Publication 587 and Form 8829 for details: https://www.irs.gov/publications/p587 and https://www.irs.gov/forms-pubs/about-form-8829.)

Who can claim these deductions

• Self‑employed workers, independent contractors, freelancers, and owners reporting business income on Schedule C (Form 1040) can generally claim the home office deduction and other ordinary and necessary business expenses.
• W‑2 employees generally cannot deduct unreimbursed employee business expenses on their federal return for tax years 2018–2025 because of the Tax Cuts and Jobs Act suspension of miscellaneous itemized deductions (exceptions include certain categories such as qualified performing artists, some reservists, and fee‑based government officials). If you fall in an exception, use Form 2106. (IRS guidance: https://www.irs.gov/newsroom/understanding-the-tax-law-changes-for-individuals.)
• State returns: some states still allow deductions for unreimbursed employee expenses. Verify with your state tax authority.

Key deductions and how they work

1) Home office deduction

• Eligibility: The space must be used regularly and exclusively for business and be either your principal place of business or used to meet clients/customers regularly. The strict “exclusive use” requirement remains central to claiming this deduction.
• Two methods: simplified and regular.
• Simplified method: $5 per square foot, up to 300 sq ft (max $1,500). This method reduces recordkeeping but still requires that the workspace meets the IRS tests for exclusive and regular use. (IRS Publication 587.)
• Regular method: Allocate direct and indirect home expenses (mortgage interest/rent, utilities, homeowners insurance, repairs, depreciation) between business and personal use. Use Form 8829 if you file Schedule C.
• Practical tip: Compare both methods in your records for the tax year. The simplified method suits smaller, straightforward spaces; the regular method often yields a larger deduction when you have significant indirect expenses or depreciation.

Internal resources: See our deeper explainers on the “Home Office Deduction” (https://finhelp.io/glossary/home-office-deduction/) and a comparison of “Simplified vs Regular Method” (https://finhelp.io/glossary/home-office-deduction-simplified-vs-regular-method-explained/).

2) Equipment, furniture and software

• Fully deductible if ordinary, necessary, and used for your business. For self‑employed taxpayers you may deduct the cost in the year of purchase using Section 179 or bonus depreciation when eligibility applies, or depreciate over the asset’s life. Small‑value items often fall under de minimis expense policies for quick write‑offs.
• Keep receipts and note business percentage when items are used partly for personal purposes (e.g., a laptop used 80% for business and 20% personal — deduct 80% of cost).

3) Internet, phone and utilities

• Deduct the business portion of your internet and phone expenses if you’re self‑employed. Determine a reasonable allocation based on actual usage or a time diary.
• If your employer reimburses your internet/phone under an accountable plan, the reimbursement is not taxable and you don’t claim a deduction. Ask your HR or payroll department about company reimbursement policies.

Internal resource: For specifics on internet expenses, see our guide “Home Office Internet Expenses Deduction” (https://finhelp.io/glossary/home-office-internet-expenses-deduction/).

4) Office supplies, services, and subscriptions

• Consumables (printer ink, paper), professional memberships, job‑related subscriptions and cloud services are deductible to the extent they are ordinary and necessary for the business or self‑employment activity.

5) Continuing education and professional development

• Courses, certifications, or conferences that maintain or improve skills in your current trade are deductible for self‑employed taxpayers. If education qualifies you for a new trade or meets minimum education requirements for a new career, it may not qualify.

6) Travel and vehicle costs

• Travel away from home for business may be deductible. For vehicle use, choose between the standard mileage rate or actual expenses; track mileage carefully with a contemporaneous log.

Documentation checklist — what to keep

• Receipts and invoices for equipment, furniture and services.
• Internet and phone bills showing total cost and a reasonable business allocation.
• Measurement of home office square footage and total home square footage or photos showing the dedicated space.
• A contemporaneous calendar, time log, or appointment records that show regular, exclusive business use and business meetings held at the home office.
• Copies of Schedule C and Form 8829 (if used), employer reimbursements, and any Form 2106 if filing as an exception.
• Keep records for at least three years from filing; retain home improvement records and sales basis documents until you sell the home (these can affect capital gain calculations). See IRS recordkeeping guidance: https://www.irs.gov/businesses/small-businesses-self-employed/recordkeeping.

Checklist for claiming deductions (step‑by‑step)

1. Confirm employment status and eligibility. Self‑employed: proceed. W‑2 employee: confirm whether you fall into a TCJA exception or whether your state allows deductions.
2. Measure and document the home office area; decide simplified vs regular method.
3. Aggregate and categorize expenses: direct vs indirect, capital vs current.
4. Allocate mixed‑use items by reasonable business percentage and keep allocation method documented.
5. Use the correct forms: Schedule C and Form 8829 for home office (self‑employed); Form 2106 only if you qualify as an exception as an employee.
6. If possible, request employer reimbursements through an accountable plan to avoid taxable out‑of‑pocket costs.
7. Maintain records for audits and back up critical files digitally; keep originals for major purchases.

Common mistakes and audit triggers

• Claiming a home office without meeting exclusive and regular use tests.
• Deductions for general household expenses that aren’t proportionately allocated (e.g., trying to deduct full mortgage interest when only a portion relates to the office).
• Poor documentation: no floor plans, no receipts, or inconsistent business‑use percentages.
• Treating personal items as business expenses without evidence.

State tax variance

• Some states decouple from federal rules and still allow unreimbursed employee business expense deductions. Always check your state department of revenue or consult a tax professional familiar with your state rules.

Employer reimbursements and policies

• Accountable plan reimbursements (employer pays business expenses and requires receipts and return of excess) are not taxable to employees. Encourage employers to use accountable plans to reduce employee tax burden. If rejected for reimbursement, keep records in case of negotiation or future employer policy changes.

Examples

• Freelance developer: Uses a dedicated 200 sq ft room (exclusive, regular). Chooses simplified method: 200 sq ft × $5 = $1,000 deduction. Also deducts 100% of business‑use software subscriptions and 80% of internet bills based on usage logs.
• Remote W‑2 marketer: Employer does not reimburse home internet or equipment. Under federal law (2018–2025), he generally cannot deduct those unreimbursed expenses on Form 1040. He negotiates a stipend with HR or seeks reimbursement under an accountable plan.

When to consult a tax professional

• If your situation includes mixed personal/business use, large renovations, depreciation questions (Section 179 vs depreciation), or multiple income sources, consult a CPA or enrolled agent. In my practice, clients with high home‑office percentages or capital improvements usually benefit from the regular method and professional tax planning.

Professional disclaimer

This article is educational and does not constitute personalized tax advice. Tax laws change and individual situations vary—consult a qualified tax advisor or the IRS for guidance specific to your circumstances. Relevant federal guidance includes IRS Publication 587 (Business Use of Your Home) and Form 8829 instructions: https://www.irs.gov/publications/p587 and https://www.irs.gov/forms-pubs/about-form-8829.

Further reading (internal links)

• Home Office Deduction: https://finhelp.io/glossary/home-office-deduction/
• Home Office Deduction — Simplified vs Regular Method: https://finhelp.io/glossary/home-office-deduction-simplified-vs-regular-method-explained/
• Home Office Internet Expenses Deduction: https://finhelp.io/glossary/home-office-internet-expenses-deduction/

Authoritative sources

• IRS Publication 587, Business Use of Your Home: https://www.irs.gov/publications/p587
• IRS — Recordkeeping for Small Businesses: https://www.irs.gov/businesses/small-businesses-self-employed/recordkeeping
• IRS Forms and instructions (Form 8829, Schedule C, Form 2106): https://www.irs.gov/forms-instructions