Which tax write-offs can remote employees claim?

Remote employees and self-employed workers often ask which home and work expenses they can deduct. The short answer: independent contractors (self-employed) have broad options and can generally deduct home office costs, equipment, internet, business use of a vehicle, and more on Schedule C. Most W‑2 employees cannot claim unreimbursed employee business expenses on their federal return because of rules enacted by the Tax Cuts and Jobs Act (TCJA) that are in effect through 2025; a few narrow employee categories still can. (See IRS Publication 587 and the IRS small-business deductions guidance.)

This guide clears up who qualifies, how to calculate the most common deductions, documentation requirements, practical examples, and smart strategies I use in client work to reduce risk and maximize legitimate tax savings.

Sources cited in this article: IRS Publication 587, IRS guidance on deducting business expenses, and IRS forms instructions (Form 8829, Form 2106). Where relevant I note state differences — states may not follow federal law exactly.

Who is eligible: employee vs. contractor

  • Independent contractors / self-employed (Schedule C filers): You can deduct ordinary and necessary business expenses, including the business use of your home, equipment, software, internet used for work, business mileage, and training that maintains or improves your skills. Use Schedule C and Form 8829 (or the simplified home‑office method).

  • W‑2 employees: For tax years 2018–2025, the TCJA suspended miscellaneous itemized deductions subject to the 2% floor, which included unreimbursed employee business expenses. That means most private‑sector employees cannot deduct home‑office or other unreimbursed job expenses on Schedule A. Exceptions remain for certain workers (for example, qualified performing artists, some fee‑basis state or local government officials, and military reservists). Those eligible may still use Form 2106. (See IRS guidance on employee business expenses.)

In my 15 years advising clients, this distinction is the single most common cause of error: a W‑2 employee assuming they can claim home office costs without reimbursement from their employer.

Home office deduction: regular vs. simplified method

If you’re self‑employed and work from home, the IRS allows two ways to claim a home‑office deduction:

  • Simplified method: $5 per square foot of qualified home office space, up to 300 square feet (maximum $1,500). This option reduces recordkeeping and avoids depreciation calculations.

  • Regular method: Calculate the percentage of your home used exclusively and regularly for business (business square footage ÷ total living area). Apply that percentage to home expenses such as mortgage interest, rent, utilities, homeowners insurance, repairs, and depreciation. Use Form 8829 for the detailed calculation.

Example (simplified): You have a 150 sq ft dedicated office — simplified deduction = 150 × $5 = $750.

Example (regular): You use a 200 sq ft office in a 2,000 sq ft house = 10% business use. If eligible home expenses for the year (utilities + insurance + allowable portion of mortgage interest) total $12,000, your deductible home business expense = $1,200 before any depreciation limits or other adjustments.

Authoritative detail: See IRS Publication 587 (Business Use of Your Home) for full rules and examples (https://www.irs.gov/publications/p587).

Common deductible expense categories for self-employed remote workers

  • Equipment and supplies: Laptops, monitors, desks, chairs, and office supplies. For qualifying property placed in service, you may elect Section 179 expensing or take bonus depreciation, or depreciate the asset over its recovery period. Smaller items are often deducted immediately as repairs/supplies.

  • Internet and phone: Deduct the business portion only. Keep a usage log or reasonable allocation if you use the service for both personal and business purposes. See our focused guide on Home Office Internet Expenses Deduction.

  • Software and subscriptions: Cloud services, professional subscriptions, and job‑related online tools are deductible if ordinary and necessary for the business.

  • Education and training: Courses that maintain or improve skills for your trade or business are deductible. Personal or qualifying education that is a requirement to meet minimum qualifications generally is not.

  • Business mileage and vehicle costs: If you drive for work (client visits, deliveries), either use the standard mileage rate or actual expense method. Keep a contemporaneous mileage log.

  • Business insurance, legal and professional fees: Fees for tax preparation related to business, business liability insurance, and consulting fees are deductible.

What W‑2 employees should do instead

  • Ask for an accountable reimbursement plan: Employers can adopt accountable plans that reimburse employees for business expenses (internet, equipment, home office supplies). Reimbursements under an accountable plan are not taxable and do not have to be reported as income; the employer deducts them. If your employer won’t reimburse, ask if they will consider providing equipment or an allowance under an accountable plan.

  • Negotiate benefits: Some employers offer stipends, equipment, or co‑working benefits. Having equipment provided avoids employee deduction issues entirely.

  • Track state tax rules: A few states still allow deductions or credits for unreimbursed employee expenses even when the federal return does not; check your state tax guidance or consult a tax professional.

Documentation and recordkeeping best practices

Good documentation reduces audit risk and makes it easy to support deductions if questioned.

  • Keep receipts and invoices for purchases.
  • Maintain a simple floor‑plan or measurement showing office square footage and a dated photo of the workspace if asked about exclusive use.
  • Retain bills and allocate percentages for shared services (internet, utilities).
  • Use a mileage log app or spreadsheet that records date, business purpose, start/stop odometer, and miles driven.
  • For repairs and improvements, separate maintenance (deductible) from capital improvements (added to basis and depreciated).

For more about documenting home office expenses under current IRS rules, see our Documenting Home Office Expenses Under Current Rules guide.

Audit red flags and how to avoid them

  • Claiming a home office that is not used exclusively and regularly for business.
  • Large, unexplained equipment purchases without supporting receipts or business purpose.
  • Failing to properly allocate shared expenses (internet, utilities) between personal and business use.

Practical advice: Be conservative when allocating mixed‑use costs and maintain contemporaneous records. If audited, a clear trail of receipts, logs, and a rationale for business necessity matters more than squeezing every dollar out of a deduction.

Examples from practice

1) Small‑business consultant (Schedule C): Converted a spare bedroom to an office (10% of house). Used the regular method to allocate utilities and depreciation; claimed new laptop under Section 179, saving tax in year one. We kept receipts and a simple diagram of the home office.

2) Salaried employee who worked remotely: Asked employer for a monthly stipend; employer set up an accountable reimbursement plan to cover equipment and part of internet. The reimbursements were nontaxable and avoided an attempt to claim disallowed employee deductions.

How to choose between simplified and regular home‑office methods

  • Use the simplified method if you want low recordkeeping and the potential deduction is under $1,500.
  • Use the regular method if your business‑use percentage is small but your itemized home expenses and depreciation would give a larger deduction.
  • Run both calculations in the first year to compare results — you can switch methods in later years (there are limits when depreciation is involved), but compare each tax year.

State taxes and local considerations

States may not conform to federal suspensions of employee deductions. Check your state department of revenue website or consult a tax professional if you have a large unreimbursed expense and live in a state with different rules.

Quick checklist before claiming deductions

  • Are you self‑employed or an eligible employee category? (If W‑2 and not in an exception, most home‑office and unreimbursed expenses are not deductible federally.)
  • Do you have exclusive, regular use of the space? Can you measure it and document it?
  • Do you have receipts and a log for mixed‑use items (internet, phone, mileage)?
  • Did you compare simplified vs. regular home‑office methods?
  • Did you ask your employer about reimbursements under an accountable plan?

Helpful IRS resources

Professional disclaimer

This article is educational and summarizes general federal tax rules as of 2025. It is not personalized tax advice. Tax outcomes depend on facts, recordkeeping, and state rules. Consult a CPA, enrolled agent, or tax attorney for guidance tailored to your situation.

Further reading on FinHelp: our pages on the Home Office Deduction, Home Office Internet Expenses Deduction, and Working From Home: Deductibility Rules for Remote Employees provide deeper dives into specific topics mentioned above.