Living in the DC Metro area, it is not unusual to see a bunch of folks working from home- or in my coffee shop.  (Yes, I just switched allegiances after more than 20 years.)

After all, this region has worked hard to supplant LA as the community with the worst traffic snarls in America. (Ours are almost 24 hours a day!)  Our governments earned this rank by working hard- I mean not building the roads we need to handle the burgeoning population.

Most of these work-at-home folks are not solopreneurs starting their own companies. Rather, they are employed by the US Government or by some of the larger firms in the area. The employers push the practice, so they don’t need as much office space, which saves them big money in these larger metropolitan areas.

Given the DC traffic, it was an easy choice for these folks to choose to work from home one to three days a week. That choice is the same one other take where the traffic may be bad, but not overpowering, like obtains in Boston, Chicago, and a slew of other metropolitan areas. Plus, it gives many of these folks more time with their families, since home-based efforts save between 90 and 120 minutes of commutation time, time that can now be spent with their families.

Most of these folks also managed to get another benefit from working at home. They were able to deduct a portion of their rent or mortgage, as entitled by law, on their tax returns. Because they maintained a home office- one sanctioned by their employers.

Not this year! Nope. The Tax Cut and Jobs Act eliminated the home office deduction for employees. This is part of the elimination of unreimbursed employee expense option, which also killed the deductions for union dues, tools, uniforms, mileage expenses, and professional dues, among others. And, don’t forget that home office deduction wasn’t limited to a portion of the rent or mortgage- it covered part of the costs for residential insurance, taxes, utilities, and the like.

(The deduction for a home office still applies for those running a business- solopreneurs, entrepreneurs, and some small business executives.)

You can bet that many of the employees that accepted the option to work from home are now going to be hitting up their employers for more compensation. After all, the new tax law means they are taking a hit to their net take-home pay. And, their employers have been and still are saving money on rent and electricity (among other items) by having their employees telecommute.

If you elect to ask for this compensation, don’t forget to remind your employer that it’s tax rate has been greatly reduced by that same tax law. Don’t limit yourself by simply seeking a raise (because there may be issues with peer compensation or wage tiers); having your employer reimburse you for your home office expenses (this is called an”accountable plan”, requiring you to submit expense accounts for the costs) would be tax-free to you and deductible to it. (It may even pay to take a $5000 pay cut, replaced by $6500 in expense reimbursement. Your after tax take home pay will be much higher! And your employer will be saving on employer taxes.)

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