Deducting Home Office for W2 Remote Employee

[ETax847]

When deducting the home office for a W2 employee, are the expenses associated with setting up the office deductible as well? Ie, desk, chairs, supplies, printer, etc?

[Mr. Pencil]

When deducting the home office for a W2 employee, are the expenses associated with setting up the office deductible as well? Ie, desk, chairs, supplies, printer, etc?

Yes, with the requirement that each expense must be for the convenience of the employer, not the employee. These are not actually expenses of the home office as such, so they are not subject to the square foot ratio. However, they must of course be 100% business use or the home office fails to be exclusive. This also means they can be deducted in addition to the simplified method available this year. If you use the worksheet on page 27 of Pub 587 (which I recommend for audit-proofing), they get lumped on Line 11.

None of this is explained very well in IRS instructions, but report depreciation and Section 179 on Form 4562 and carry it either to Line 4 of Form 2106, or directly to Line 21 of Schedule A. A qualified home office is treated as a business location for listed property.

[ETax847]

Thanks, and as for the home office deduction itself, where do I do the allocation? I see the worksheet, but I want to see what the deduction results in by using the actual method not the safe harbor. For a W2 employee what sched does the actual method calc take place?

[ETax847]

I believe form 8829 is only to be used with a sch c, but since this a w2 employee, not sure what sch to use.

[Mr. Pencil]

Thanks, and as for the home office deduction itself, where do I do the allocation? I see the worksheet, but I want to see what the deduction results in by using the actual method not the safe harbor. For a W2 employee what sched does the actual method calc take place?

I edited my previous post to address these issues. Use the worksheet in Pub 587, which is basically the same as Form 8829 but does not get filed.

[mcb39]

I believe form 8829 is only to be used with a sch c, but since this a w2 employee, not sure what sch to use.

Form 2106 Line 4 has a worksheet for Home used for Business; All of the expenses will then flow to Line 21 of Schedule A.