Telecommute? You may get a tax break

Flickr user mksout

(MoneyWatch) There are many benefits to occasionally working from home, both for your company and for you personally.  But is there a tax benefit? Maybe.

As personal finance blog Doughroller points out, it's possible to claim a home-office deduction for your time spent working in your bathrobe. But the path is narrow, and you'll need to tread carefully.

First, it's worth pointing out that I'm not a lawyer, and you'll want to chat with a tax professional before trying to claim a home-office deduction for teleworking. But IRS Publication 587 - Business Use of Your Home spells out the key criteria. You must use your home:

  • Exclusively and regularly as your principal place of business, or
  • Exclusively and regularly as a place where you meet with patients, clients or customers as a normal course of your trade or business.

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If you've ever run your own business from home, you might be familiar with those rules. But there's more. If you are working from home while in the employ of someone else, there are additional criteria:

  • Your business use must be for the convenience of your employer, and
  • You must not rent any part of your home to your employer and use the rented portion to perform services as an employee for that employer.

The first one -- "for the convenience of your employer" -- is the sticky part. Most teleworking agreements are done for the morale and convenience of the employee, not the employer. So it's a good idea to get a letter from your manager that says you are working from home for the convenience of the business. That, and go see a tax pro for additional advice. 

Has anyone ever claimed a home-office deduction as an employee rather than as a self-employed entrepreneur? If so, please let us know your experience with this part of the tax code.

Photo courtesy of Flickr user mksout

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