"Most of us would like to pay the IRS as little money as possible each year. And that's where tax credits and deductions come in. A tax credit is a dollar-for-dollar reduction of your tax liability, while a tax deduction allows you to exempt a portion of your income from taxes. If you're in a high tax bracket, claiming the right deductions could result in a huge amount of savings."
"Believe it or not, you could work from home on a full-time basis and still not be eligible. "This deduction is only for taxpayers who are self-employed," says Mark Steber, Chief Tax Officer at Jackson Hewitt. "It is not for employees who work remotely from a home office." In addition to the self-employment requirement, there are other criteria for being able to claim a home office deduction."
Most taxpayers seek to minimize IRS payments using credits and deductions. A tax credit reduces tax liability dollar-for-dollar, while a deduction exempts part of income from taxation. Working from home became common after 2020, prompting interest in the home office deduction. The home office deduction applies only to self-employed taxpayers and not to remote employees. The home workspace must be used exclusively for work and must be the primary location of business activities. A room that doubles as a dining area does not qualify. Additional criteria beyond self-employment apply to claim the deduction.
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