Working From Home in Kansas City: What You Can (and Can't) Deduct

Kansas City has more home-based businesses and remote workers than ever. The question I hear most from both groups is simple: "Can I deduct my home office?" The honest answer depends on how you are paid.

If you are a W-2 employee working remotely

Under current federal law, employees cannot deduct a home office, even if their employer requires them to work from home. That surprises many people in the metro who went remote. What you can do instead: ask your employer about an accountable reimbursement plan for internet, equipment or a stipend, which can be paid to you tax-free if it is set up correctly.

If you are self-employed or own a business

You can generally deduct a home office if the space is used regularly and exclusively for business and it is your principal place of business. In practice, that looks like:

• A spare bedroom in a Waldo bungalow that is only an office: likely qualifies

• A desk nook in a Lee's Summit basement used only for work: can qualify

• The dining table in a River Market loft that is also where you eat: usually does not

Two ways to calculate it

• Simplified: $5 per square foot, up to 300 square feet ($1,500 max). Easy, no depreciation.

• Regular: your business percentage of rent or mortgage interest, utilities, insurance and depreciation, on Form 8829. Often much larger for renters with a dedicated room.

I walk through a full side-by-side example in Home Office Deduction: Simplified vs. Regular Method.

Why it helps on both sides of State Line

Missouri and Kansas income tax both start from your federal adjusted gross income. A home office deduction that lowers your business profit on Schedule C also lowers the income your state return starts from, and it reduces self-employment tax too.

Kansas City home office checklist

• Measure the office and the whole home; save a simple sketch

• Take a few photos of the space set up for work

• Keep a year of rent or mortgage statements, utility bills and insurance

• Keep business and personal use separate (no guest bed in the office)

• Note client meetings held there, if any

New to self-employment? Start with my Kansas City self-employed tax checklist.

General information, not tax advice for your specific situation. See IRS Publication 587 for the official rules.

About the author

Robert Allen Bautista is a Kansas City tax preparer and accountant. He spent four years at PwC in IT audit and tax, served as Chief Accountant at a CPA firm, holds an M.S. in Accounting, and is a CPA candidate. He has worked with 350-plus individual and small business clients and writes plain-English tax guides in English and Spanish.