- The Tax Cuts and Jobs Act, which went into effect in 2018, took away a package of tax breaks, including a write-off for unreimbursed employee expenses.
- Seven states allow their taxpayers to claim these costs on their state income tax returns.
- Be ready to back up your expenses with receipts, statements and other documentation.
The IRS won't let you write off those home-office expenses on your 2020 taxes, but your state just might.
It's been about three months since state governments put in place stay-at-home orders to mitigate the spread of coronavirus. Indeed, employees who have the option to work remotely are getting used to it.
More than a third of employees want to continue logging on from their couches and kitchen tables full-time even after restrictions lift, according to a study from CreditCards.com.
On average, they're spending an additional $108 per month on higher utility bills, more groceries and other costs, the survey found.
The website polled 2,768 adults online in May.
While self-employed people can claim a federal tax deduction for their home office, those employed by others are no longer eligible to write-off unreimbursed employee expenses on their federal returns.
That's because the Tax Cuts and Jobs Act, which went into effect in 2018, eliminated this tax write-off, along with a package of breaks that were known as "miscellaneous itemized deductions."
However, seven states took a different tack, according to Nathan Rigney, lead tax research analyst at H&R Block.
"Folks who are disappointed they won't get a federal tax benefit should go ahead and keep records, including receipts of the expenses incurred," said Rigney.
Those extra costs could include new computer monitors, desks and ergonomic chairs, he said.
These employees may also be able to deduct a portion of their rent, mortgage interest and utility bills that are attributable to that space on their state tax returns, Rigney said.
Typically, unreimbursed employee expenses are an itemized deduction on state income tax returns. This means the deductions claimed on your return must exceed the standard deduction – which will vary in each state.
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For example, the 2019 standard deduction in New York is $8,000 for single filers ($16,050 for married couples who file jointly).
In California, it's $4,536 for single taxpayers, while joint filers can claim a standard deduction of $9,074.
Meanwhile, the federal standard deduction for the 2019 tax year is $12,200 for singles ($24,400 for married-filing-jointly).
"It will only benefit those whose itemized deductions exceed the standard in that given state," he said. "But states tend to have a much smaller standard deduction."