Home Office Deductions

[FuskieBP]

2020 was a complicated year. I had 2 W2 jobs and 3 home businesses.  I have a few questions about home and auto deductions.

W2 Business A was a traditional 40hrs/week job but 100% remote. I used a dedicated space in my basement for this work, which by square footage was 5% of my total house. Despite my using my home for work for 10 months, my understanding is that I cannot deduct any home office expenses. My Sister-In-Law says that I can, but I could not see anything in TurboTax that would allow it.  Is she correct and if so, how do I enter home office expenses in TurboTax?

W2 Business B was working for the US Census. I was paid for car expenses, so this job gets me nothing on either a home or auto deduction. To the contrary, because I was compensated per mile for my driving, I actually have greater income. Is this correct, and if so, then how do I enter auto expenses on a W2?

Schedule C Home Business #1 was a few months of driving for a food delivery service before the pandemic started. I did not work in the home at all but drove and used my phone a lot, so I deducted my auto and phone expenses based as a percentage of the number of miles driven for the year and the number  of hours I used the phone for the job.

Schedule C Home Business #2 was a blip - I tried my hand at freelance work through Upwork but only won one contract worth $200. I used the same dedicated space in my basement as in W2 Business A. Not worth deducting the space I used as a home office, right? Or should I have just folded this into Business #3 even though it was more related to Business A?

Schedule C Home Business #3 provided more substantial income and added 4-6 hours to the workday.  This freelance work was also paid through Upwork but not enough to warrant an 1099 (though there was a 1099-NEC for compensation in lieu of cash). Again, I used the same dedicated work space, and on this business I included a home office deduction. Was this correct?

One other piece of information. After totaling up all my personal deductions, I was within $600 of moving beyond the standard deduction of $12,400 and being able to itemize.

Can anyone help me wrap my head around whether I did this right? If not, what should I have done? I have 2 days to fix it.

Thank you.

[AnnetteB6 · Accepted solution]

It appears that you are on the right track.  

For the two W-2 jobs, any related expenses are 'employee' business expenses.  Those are not deductible on your Federal return for the 2018 through 2025 tax years due to the Tax Cuts and Jobs Act passed in 2017.  They may be deductible on your state return if your state did not comply with the Federal change (Alabama, Arkansas, California, Hawaii, Minnesota, New York and Pennsylvania).  These would be reported on Form 2106 and transferred to your state return.  However, the same home office space could not be used for your W-2 job and also for self-employment -- it would need to be further subdivided between the two types of income so it is not likely to have an effect on your state that would be worth the effort of trying to claim it since the office was only 5% of your total home square feet.

If your Schedule C businesses 2 and 3 were similar enough to consider them related to one another, then you can go ahead and combine them into a single Schedule C.  Given that the income for business 2 was only $200, it would not be worth the effort to try to claim a portion of the home office space for that business.  You are correct to include the home office only for business 3 based on the scenarios you provided.  

As for the Schedule A deductions, none of the home office or employee business expenses will affect that portion of your return to increase your deductions.  Unless you have some charitable contributions that you did not include or something else that was omitted, then just take the standard deduction.