Home Office Deductions for W2 Married

[tphtph]

Husband and I both are W2 regular employees for different companies.   We both have worked from home since before Covid (same situation at our jobs...no office space at work, so our bosses told us to work from home permanently).

We are NOT doing the standard deduction.   I thought home offices are no longer deductible.   But under Employment Expenses, Job Related Expenses, Turbo Tax is still asking us for the "old" information that I thought was no longer deductible...such as square footage of the home office, how much in utilities, etc.  

It also asks for mortgage interest and property taxes paid (which is very confusing, because we had already entered that in the Your Home section).  It's also very confusing because this section has an area for both my husband's biz expenses/home office and my own.   So under his home office, it asks for utilities for the entire house.   And then under mine, it asks the same question.   So if our utilities are $2,000 per year for the entire house, do I enter $1,000 on my home office and $1,000 on his?

Thanks for any help with this.  Very confused

[AnnetteB6 · Accepted solution]

You are correct, home office expenses for W-2 employees is not deductible on your Federal return (due to the Tax Cuts and Jobs Act passed in 2017).  You are still allowed to enter the information as part of your Federal return in case your state did not conform to the TCJA with regard to employee business expenses.

When entering the information for the home offices, as long as they are using a different designated space, then you would enter the total utilities amount under each home office entry.  The percentage of the total utilities applicable to each home office will be calculated based on the relative size of each office.

[tphtph]

Thank you so much.    On top, where the refund is in green...I notice that the federal return is not affected when I change numbers in the utilities, etc.    But the state refund in green (California) goes up when I enter the home office expenses.   I assume California still allows some deductions but the federal does not?   Thanks again

[SharonD007]

Yes, you are correct. CA does not conform to the Tax Cuts and Jobs Act. Unreimbursed employee expenses are deductible on your CA tax return if your Misc. expenses are greater than 2% of your federal adjusted gross income. 

For additional information, please review the TurboTax Help article Can employees deduct any job-related expenses?

[tphtph]

Sorry, and one more thing please that is confusing.   Under YOUR HOME, I entered Real Estate Taxes of about $10K.

Then later when entering Home Office expenses, it again asks for Real Estate Taxes. 

So when I enter $10K  again under Home Office, the amount in taxes up under Your Home doubles to become $20K.   Obviously, Turbotax is counting the $10K twice.

When I entered $10K under Home Office, it also says to review Deductions and Credits.   I  did review this, and under Your House it seems to indicate that we paid double the amount of property tax we really did.

[tphtph]

I may have marked this as solved too soon!   I still cannot resolve the property tax issue I'm having.   Still exploring and researching if I'm doing tis right.

[JulieS]

Yes, you can take your home office deduction on your California tax return even though it is not allowed on the federal return. 

If you enter your property taxes  in the Home Office section, the portion you can't deduct (100%) of it will transfer to the Property Taxes section. 

Because you want to use this expense for your state return, you want to leave it under your home office, but you shouldn't have it entered again under the 1098-INT section or the property taxes section. 

To remove the redundant amount you need to revisit the section where you entered your property taxes. If you aren't sure check here first:

1. Select Federal from the left side menu, then Deductions & Credits. 
2. Scroll down to Your Home, expand the section and click Start or Revisit to the right of Property (Real Estate) Taxes.
3. You can edit the number here if the this the first place you entered it. 
4. If you can't edit it here, select Federal from the left side me, then Deductions & Credits. 
5. Click Edit/Add to the right of Mortgage Interest and Refinancing (Form 1098)
6. Click Edit to the right of your 1098 entry.
7. Click Continue until you get to the page that says, Let's get the details from your 1098, at the top. 
8. Below box 5 you will see a box for Property (real estate) taxes.
9. You can edit this amount here. 
   
    

[tphtph]

Extremely helpful, thanks.    So I left the property tax payment in my Home Office Deduction area.   But up above in the Your Home area, I changed the additional property tax to $0.  After clicking through, the tax is no longer doubled.