RESOURCES

IRS Tax Tip 2020-98, August 6, 2020

The home office deduction allows qualifying taxpayers to deduct certain home expenses on their tax return. With more people working from home than ever before, some taxpayers may be wondering if they can claim a home office deduction when they file their 2020 tax return next year.

Here are some things to help taxpayers understand the home office deduction and whether they can claim it:

  • Employees are not eligible to claim the home office deduction.

  • The home office deduction Form 8829 is available to both homeowners and renters.

  • There are certain expenses taxpayers can deduct. They include mortgage interest, insurance, utilities, repairs, maintenance, depreciation and rent.

  • Taxpayers must meet specific requirements to claim home expenses as a deduction. Even then, the deductible amount of these types of expenses may be limited.

  • The term "home" for purposes of this deduction:

    • Includes a house, apartment, condominium, mobile home, boat or similar property.

    • Also includes structures on the property. These are places like an unattached garage, studio, barn or greenhouse.

    • Doesn't include any part of the taxpayer's property used exclusively as a hotel, motel, inn or similar business.

  • There are two basic requirements for the taxpayer's home to qualify as a deduction:

    • There must be exclusive use of a portion of the home for conducting business on a regular basis. For example, a taxpayer who uses an extra room to run their business can take a home office deduction only for that extra room so long as it is used both regularly and exclusively in the business.

    • The home must be the taxpayer's principal place of business. A taxpayer can also meet this requirement if administrative or management activities are conducted at the home and there is no other location to perform these duties. Therefore, someone who conducts business outside of their home but also uses their home to conduct business may still qualify for a home office deduction.

  • Expenses that relate to a separate structure not attached to the home will qualify for a home office deduction. It will qualify only if the structure is used exclusively and regularly for business.

  • Taxpayers who qualify may choose one of two methods to calculate their home office expense deduction:

    • The simplified option has a rate of $5 a square foot for business use of the home. The maximum size for this option is 300 square feet. The maximum deduction under this method is $1,500.

    • When using the regular method, deductions for a home office are based on the percentage of the home devoted to business use. Taxpayers who use a whole room or part of a room for conducting their business need to figure out the percentage of the home used for business activities to deduct indirect expenses. Direct expenses are deducted in full.

2020 Form W4 – Employee’s Withholding Certificate

The Form W4 has been redesigned for 2020. If you have a W4 on file with your current employer, you are not required to complete a new Form W4, unless your employer requires you to do so.

Quick Instructions:Step 1: Everyone must complete Step 1

Step 2: Complete this step if you have more than one job or you are married filing jointly and both spouses are employed.

    2b) Use the worksheet on page 3 to calculate your tax withholding requirement if you have more than one job or source of income.

Step 3: Claim Dependents. If you have dependent children living at home or other dependents living in the home, you will need to do some math to calculate the correct amount for step 3. 

  1. If your income is $200,000.00 or less (for married filing jointly if your income is $400,000.00 or less)

    1. Multiply the number of qualified children under age 17 by $2,000.00 (if you have 2 qualified children under 17 years – you would enter $4,000.00)

    2. Multiply the number of other dependents (not your qualifying children under 17) by $500.00.

    3. Add the amounts and enter it on Line 3.

Step 4: Other Adjustments (optional). 

  1. Record other income

  2. Record any deductions you expect to claim on your tax return

  3. Record any additional withholding amounts (optional)

Step 5: Sign and Date the form before returning it to your employer.

Links to IRS Tax Forms:

Where is my Refund:  https://sa.www4.irs.gov/irfof/lang/en/irfofgetstatus.jsp

The IRS will issue most refunds within 21 days. However, your return may require additional review which may take the IRS a little longer to issue your refund. You can use the “Where’s My Refund” link below to check on the status of your Federal Tax Return.

Form W4 – Employee’s Withholding Certificate https://www.irs.gov/pub/irs-pdf/fw4.pdf

Form W9 – Request for Taxpayer Identification Number and Certification https://www.irs.gov/pub/irs-pdf/fw9.pdf

Tax Withholding Estimator Tool  https://apps.irs.gov/app/tax-withholding-estimator

Taxable or Not: Social Security/Railroad Retirement Tier 1 Benefits Tool https://apps.irs.gov/app/IPAR/startsession/IPAR_1/en-US/Attribute~ssb_interview_complete~global~global?user=guest

Change of Address – Notify the IRS on Form 8822 https://www.irs.gov/pub/irs-pdf/f8822.pdf

Request a Transcript of a Past Tax Return

Go to www.irs.gov/forms-pubs/form4506-T

Use Form 4506-T to request previously filed tax return information. Taxpayers using a tax year beginning in one calendar year and ending in the following year (fiscal tax year) must file Form 4506-T to request a return transcript.

Wheres my refund?


Do you need to check the status of your Federal tax refund? No Problem. Just go to the following website and enter your information. 

https://www.irs.gov/refunds     

You will need:

  • Your Social Security Number

  • Filing Status shown on your tax return

  • Refund amount shown on your tax return

That’s It! It is very easy to find out the status of your Federal Tax Refund.