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1099-MISC – Can we deduct Mortgage payments?

 My wife was employed in Maryland from 2012-2015 (we live in NY) and she had a W-2 from her MD employer. In 2016, she worked part-time for a month in MD for the same employer and received a 1099-MISC for the same role. We own a home close to her MD workplace which we use occasionally. We’ve always received a W-2 in the past, so new to the “independent contractor” deductions and quite frankly didn’t realize employer had not deducted any taxes till we received the 1099-MISC (we underpaid taxes). Since she stayed in our house rather than a hotel, can we deduct our home expenses we incurred as a business expense? Would that quite literally be that month’s mortgage/property tax payment? Anything else I am missing? Appreciate your help in advance!

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Level 15

1099-MISC – Can we deduct Mortgage payments?

Basically, no. But the interest you paid on the mortgage for the entire year is deductible weather it's your primary residence or 2nd home. The principle part of the mortgage payment is never deductible under any circumstances.

Now if you qualify to claim a home office in that house (and I doubt you will qualify, since claiming a home office would have to be to the convenience of the employer and not "your" convenience) that doesn't change the fact that the principle part of the mortgage is still not deductible. All that will do is shift the deductible mortgage interest from the SCH A to the SCH C resulting in more paperwork for you, and absolutely no change what-so-ever in your tax liability.

Also, you may only be able to claim the home office at best for the SCH C (1099-MISC income) only for the time you were actually "self-employed", for the months you actually lived in the house, and you can only claim that space specifically used in the house for the home office. So in the long run it would not be worth your time, as there would still be no change to your tax liability.

In other words, don't waste your time with the home office stuff. 

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