Employed Teleworker (not Independent Contractor) Home Office Tax Deductions

You cannot use the home office deduction if your wages are reported on a W-2. This was changed in 2017 to disallow using those expenses for employees. 

The federal return no longer allows a deduction for employee business expenses. There are a few states that still allow these deductions. Alabama, Arkansas, California, Hawaii, Minnesota, New York, and Pennsylvania all provide a deduction for unreimbursed employee business expenses on their respective state income tax returns.

If you live in one of the states that still allow employee business expenses as a deduction, you would enter this in the federal return, and the information will be transferred to your state return.

Here's how to enter the information:

• Click on Federal Taxes (Personal using Home and Business)
• Click on Deductions and Credits
• Click on I'll choose what I work on (if shown)
• Scroll down to Employment Expenses
• On Job-Related Expenses, click on the start/update button
• Once in this section, you can enter union dues and any other employee expenses such as the Home Office deduction.

If your income is reported on a 1099-NEC or a 1099-MISC, then the Home Office deduction is allowed on Schedule C.

Please see this TurboTax Help article for more information.