Office In Home Deduction?

[dyne]

I just had a client who worked for an employer for years and recently was allowed to work at home instead. This seems to be becoming common. I asked about the possibility of his claiming office at home expenses and he advised that he had signed an agreement with his employer to NOT claim a deduction for office at home expenses. I suppose that is ANOTHER questions we must ask such clients. I thought that was interesting.

[dtlee]

It is probably that the employer is tired of being dragged into a situation where the employee is asking for the employer to document that the office in home is required or for the employer's convenience.

In this area, due to the high cost of commuting, many New York City employers allow the employees to work from home as a "perk" for the employee. When it is for the benefit of the employer, I have seen the employer cover initial setup costs like network wiring and remove any corporate office space.

But when I hear an employee say, "My employer lets me work from home 2 or 3 days a week," it is often a clue that it is not a requirement for employment nor for the employer's convenience.

[taxea]

I just had a client who worked for an employer for years and recently was allowed to work at home instead. This seems to be becoming common. I asked about the possibility of his claiming office at home expenses and he advised that he had signed an agreement with his employer to NOT claim a deduction for office at home expenses. I suppose that is ANOTHER questions we must ask such clients. I thought that was interesting.

Did the employer explain why TP not claim a deduction for OIH? The employee is entitled to it and was very foolish to sign the document. What authority does the company have to deny the employee tax expenses that he is entitled to? I don't think we need to ask our client that question. If the client has a document from the company saying that his working from home is for the convenience of the company that is all he needs to take the OIH if he otherwise qualifies for it.
I really want to know what the employer's reasoning is on this one.

[ddoshan]

I just had a client who worked for an employer for years and recently was allowed to work at home instead.

Can't really tell but from the above it infers that the employee working from home is not necessarily for the convenience of the employer. But just an accomodation or agreement between the two which may explain why the employer requested what they did.

[taxea]

I just had a client who worked for an employer for years and recently was allowed to work at home instead.

Can't really tell but from the above it infers that the employee working from home is not necessarily for the convenience of the employer. But just an accomodation or agreement between the two which may explain why the employer requested what they did.

If an employer enters into an agreement of this nature you can bet the company is saving money on equipment if nothing else so I would say it definately is for the employers convenience.

[Gary2]

If an employer enters into an agreement of this nature you can bet the company is saving money on equipment if nothing else so I would say it definately is for the employers convenience.

Why is that? The last time I was in a work from home situation, I still had a desk and computer in the office.

[dyne]

In my case my client is given a W-2 with rather high income. The employer advised that
he had an office and equipment at his employer's location and he COULD work there if
he wished so working at home would NOT be for the convenience of the employer.
It would be a lost cause to claim an office in home expense deduction since the 2%
AGI limitation would apply which would eliminate the deduction anyway.

[taxea]

In my case my client is given a W-2 with rather high income. The employer advised that
he had an office and equipment at his employer's location and he COULD work there if
he wished so working at home would NOT be for the convenience of the employer.
It would be a lost cause to claim an office in home expense deduction since the 2%
AGI limitation would apply which would eliminate the deduction anyway.

your client would not qualify for office in hom because he is making a choice to work there even though he has a location at the business to work.

[JG EA]

In my case my client is given a W-2 with rather high income. The employer advised that
he had an office and equipment at his employer's location and he COULD work there if
he wished so working at home would NOT be for the convenience of the employer.
It would be a lost cause to claim an office in home expense deduction since the 2%
AGI limitation would apply which would eliminate the deduction anyway.

Not to mention AMT if it beats the 2%.

[Gary2]

Some thoughts, only partially tangential

Often, the biggest value of the OIH is the ability to deduct transportation expenses that would otherwise be considered commuting. That won't apply to the hi-tech worker at home, but the obvious example is the well-known anesthesiologist case (Soliman, I believe).

Another tax reason for working at home is to avoid state taxes, where it's legal. This generally doesn't even require qualifying for the OIH deduction. For example, within the high tech industry in northeast MA, I've read of NH residents with MA jobs who will work from home a few days a week and keep a log. They'll then pro-rate their MA wages. (And "I've read" is meant literally; it's not a euphemism for "I have clients like that but don't want to admit it"; I've never actually seen such a return, let alone the letter that MA is sure to send unless the employer reports the wages accordingly.)

As far as I know, this is legit under MA law and regulations. On the other hand, NY has caught on to this and won't allow it, though I expect to see it taken to federal court sooner or later. I don't recall whether the OIH qualification factors into NY's rules.

[taxea]

Why is that? The last time I was in a work from home situation, I still had a desk and computer in the office.

Gary I believe it would depend on the nature of the work. I also believe there is a difference between having a desk and computer at the office but still working from home, as in the case of realtors. The sales person is a Sch C and frequently works at home but occasionally goes to the office for various reasons. Is this desk shared with other realtors or does the company maintain a separate workplace for each sales person?

[Gary2]

Gary I believe it would depend on the nature of the work. I also believe there is a difference between having a desk and computer at the office but still working from home, as in the case of realtors. The sales person is a Sch C and frequently works at home but occasionally goes to the office for various reasons. Is this desk shared with other realtors or does the company maintain a separate workplace for each sales person?

The real estate agent is a different situation, because they're self-employed. They don't have to worry about the "convenience of employer" rule, so it wouldn't matter if there's a desk at the agency's office.

[S T]

The real estate agent is a different situation, because they're self-employed. They don't have to worry about the "convenience of employer" rule, so it wouldn't matter if there's a desk at the agency's office.

Precisely - I have a real estate agent T/P - who is an independent contractor - who has the "availbility" of a desk at the Real Estate Office - however, his License Registration with the Board of Realtors - is at his Home Location - not at the Office. And that T/p maintains an office in his home. His desk at the Realtor (Broker) Office is NOT for the convenience of the Employer - .

Sandy

[taxea]

The real estate agent is a different situation, because they're self-employed. They don't have to worry about the "convenience of employer" rule, so it wouldn't matter if there's a desk at the agency's office.

Sorry...brain must have been disengaged this morning.