More Americans want home offices. There may be a tax reason for that.

"Ever notice in those reality shows, like "House Hunters," focused on residential real estate and home renovations, that everyone wants a home office? There's a good reason for that. That extra home office space can be tax-deductible every year ‒ as long as you meet all the requirements to claim it. There are a lot of rules around what home office expenses can and can't be deducted and how they can be deducted, but you must know first if you even qualify."

"The IRS has a clear line to determine that: if you receive a W-2 for your work, you are not eligible. On the federal level, home office deductions are "not for an employee [of a company who] is a remote worker," said Hannah Cole, an IRS enrolled agent and author of Taxes for Humans. Hybrid workers are also out. Some states, like Pennsylvania, allow W-2 employees to take deductions for some work-related expenses the company doesn't reimburse. Check your state's rules."

"But the federal government generally reserves home office deductions for those who receive a 1099 for their work. They typically include people who are self-employed, freelancing, or working on a contract. If you have a side hustle in addition to a W-2 job, then you may be able to take the home office deduction. About 72.9 million Americans were self-employed freelancers, consultants, and contractors managing their own businesses in some capacity last year, according to MBO partners, which provides tools for independent workers."

Federal home office deductions are generally limited to self-employed individuals who receive a 1099, including freelancers, contractors, and consultants. Employees who receive a W-2 — including remote and hybrid workers — are not eligible for the federal home office deduction. Some states, such as Pennsylvania, allow W-2 employees to deduct certain unreimbursed work-related expenses. The deduction requires exclusive and regular use of a home office and involves complex rules about what expenses qualify and how to calculate the portion deductible. Millions of Americans work independently and may qualify if they meet the requirements.

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