Home Office Electricity Deduction (2024)

If you live on this planet, you already know that taxes are a pain.Any tax deduction you can find makes them a little less painful, so you’re trying to figure out how to get a home office electricity deduction to keep a little more of your hard-earned cash.

But what if you could save more, not just during tax season, but year-round?

Power Wizard can help you find the best deals on electricity so fast it’s like magic!

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Home Office Types

There are two main types of home offices. The kind of home office you have can depend on your work situation and family.

Personal Home Office

One type of home office is a personal home office. Personal use home offices are not used specifically for work, such as for a job or running a home business.

Some people have personal home offices for running a household, such as handling:

• Personal finances
• Paperwork
• Records
• And files

A home office that you use for personal use is NOT tax-deductible.

Working Home Office

A working home office, on the other hand, is used specifically for work. Working home offices are used exclusively by business owners or remote workers to perform their job duties or run their business.

There are business expenses associated with a working home office that may be tax-deductible.

Are Home Office Expenses Tax Deductible?

The expenses associated with a working home MAY be deductible. For the costs of a home office to be tax-deductible, two of the following requirements must be met:

Regular and Exclusive Use

You have to regularly and exclusively use the home office for work or business purposes. This means that you cannot use the office for any other purposes, including personal use.

You can only use the office for business or work purposes for a home office expense deduction.

Principal Place of Your Business

The home office has to be your principal place of business.

You have to work remotely from home 100% of the time or run your business solely out of the home office location if you are claiming a home office on taxes.

What Are The Benefits Of A Home Office Electricity Deduction?

One of the tax deductions and benefits is that you can write off is a portion of the utilities. One of the utilities you can use as a tax deduction is electricity.

What percentage of utilities can I write off?

One of the tax deductions and benefits is that you can write off is a portion of the utilities. One of the utilities you can use as a tax deduction is electricity.

What percentage of utilities can I write off?

You can write off a percentage of your electricity bill that is equal to the percentage of space that your office occupies in your home. For example, if your home office occupies 20% of the space (square footage) in your home, then 20% of your electricity bill can be used as a tax deduction.

1. Reduces your taxable income. The primary benefit of a home office electricity deduction is that it reduces the amount of income that you have to pay taxes on.
2. Your business is paying for some of your normal electricity use/bill. If you are running a standard office at home using a computer and a printer, then you are probably not using major amounts of electricity over what you would normally use in your household anyway. This means that you are able to deduct electricity expenses that you would likely have anyway.

(If you are running a type of business that is using a lot more electricity than you would personally use, you can still write off the percentage of the electricity you’re allowed to deduct.)

As of 2019, the IRS allows a home business to write off $5 per square foot of office space as a tax deduction.

What Are The Sources Of Home Office Electricity Consumption?

The sources of home office electricity consumption can vary by the type of business or work you are performing from your home office.

Computer

Your computer is actually one of the biggest consumers of energy in a home office.

Computer monitors use approximately 100 watts of electricity per day. While the computer consumes electricity when in use, you can save on electricity consumption by turning off your computer when you’re not using it —especially on nights and weekends.

Lights

Lighting your home office is another source of electricity consumption. Overhead lighting and lamps are both sources of lighting for a typical office.

If possible, use daylight as a natural source of lighting to help you cut electricity use. You can also switch to energy-efficient light bulbs.

Printer

Believe it or not, your printer consumes a lot of electricity. You can save electricity by using an energy-efficient (ENERGY STAR rated) printer.

You can also make sure that your printer either goes into sleep mode or is turned off when not in use.

Thermostat

Another huge electricity suck in your home office is your thermostat —whether heating or cooling your office space.

A thermostat controls 60% of the energy use in your home office.

You can save money by turning your thermostat up (for AC) or down as low (for heat) or high as you can stand to save electricity.

What Deductions Can I Claim For A Home Office?

There are quite a few tax deductions for running a home office for business or remote work.

You can write off a percentage of your:

1. Computer
2. Internet
3. Phone
4. Utilities (including electricity)

What Utilities Can Be Deducted For A Home Office?

There are several different utilities that can be deducted for a home office.

Generally, you can write off the percentage of your bill that correlates to the square footage percentage that your office space takes up in your home.

If your home is 1,000 square feet and your office is 150 square feet, then you can write off 15% of your bill (for each utility) as a home office expenses tax.

Home Office Electric Bill Deduction

One of the utilities you can deduct as a home office expense is electricity.

Other Utility Deductions

The other utilities you can use as a tax deduction include:

• Garbage/recycling
• Water
• Heating
• Cooling
• Sewage
• Internet
• Phone (If you have a business line, you can write off 100% of the bill as a tax deduction. If you are using a personal landline or cell phone for business use then you can only write off a percentage of the bill.)

What Other Expenses Can Be Deducted For A Home Office?

There are quite a few expenses that can be deducted for a home office, besides electricity. You can write off a percentage of each of your home office expenses. The percentage you can deduct correlates with the percentage your home office takes up of your home.

For example, if your home office is 20% of your home, then you can deduct 20% of each bill as a home office expense.

Some of the other home office expenses you can deduct are:

• Mortgage interest (if you own your home)
• Home depreciation (if you own your home)
• Property taxes (if you own your home)
• Homeowners insurance (if you own your home)
• Home maintenance (if you own your home)
• Business insurance
• Rent (if you rent your home)
• Renters insurance (if you rent your home)

How to Claim Home Office Expenses – Electricity Deduction

According to the IRS, you have two options when claiming home office expenses. You can claim home office expenses whether you rent or own your home. You can also apply the deduction no matter the type of home where you live (apartment, single-family home, etc.).

Home Office Electricity Deduction Options

When deducting electricity for a home office, you have two options for calculating the amount you can claim on your tax returns.

Simplified Option

The first way to calculate a home office electricity deduction is by using the simplified option. This option is generally used for tax returns filed prior to January 2013.

The simplified option allows you to multiply a prescribed rate by the allowable square footage of the home office instead of using actual expenses.

You can then deduct this portion of your electricity bill as a home business expense. This is as opposed to an actual electricity expense.

Regular Method

A second way to calculate a home office electricity deduction is by using the regular method. This option is required for tax returns for 2012 and years prior.

The regular method calculates how much of your home you use for business as a percentage of the total area of your home.

You can then deduct this percentage of the actual electricity expenses as a tax deduction.

Other Ways to Reduce Home Office Electricity Costs

Beyond using electricity use for your home office as a tax deduction, there are other ways you can reduce electricity costs.

Ensure You Have the Best Plan For Your Needs

One of the best ways to reduce your electricity costs for your home office is to ensure you have the best electricity plan for your needs.

Each home, home office, and family uses electricity differently. This means that you have to choose an electricity plan that speaks to your needs.

Power Wizard offers a Savings Estimate to match you with the electricity plan that fits your home, lifestyle, and electricity usage the best. Plug a few pieces of information into the Savings Tool, and it scours all of the available plans on the market to choose the one that is the best fit for you.

With so many electric companies and electricity plans to choose from, using Power Wizard can help you find the best option for you.

How To Switch Electricity Plans To Get The Most Out Of Your Home Office Electricity

The easiest and most effective way to switch electricity plans to get the most out of your home office electricity is to use the Power Wizard Savings Estimate tool.

Power Wizard is an impartial third-party that offers a Savings Estimate to match you with the electricity plan that is the best fit for your home, lifestyle, and electricity usage.

Plug a few pieces of information into the Savings Estimate tool and it scours all of the available plans on the market to choose the one that is the best fit for you.

Once you find the best plan, Power Wizard also:

• Registers you for the better plan
• Cancels your old plan
• Continues to monitor available plans to always ensure that you are enrolled in the best plan for you

For People Who Like Stress – The Hard Way

Your other option for switching electricity plans is to do it the old-fashioned way — manually.

A manual search for the best electricity plan is:

• Time-consuming
• Frustrating
• Confusing

One of the worst parts of a manual search is that it might not even yield the best results. After putting yourself through hours (maybe even days) of searching, analyzing, and calculation, you could end up overpaying for electricity.

That’s the direct opposite of what you are trying to achieve by switching electricity providers.

Power Wizard – For People Who Like Efficiency

Power Wizard and the Savings Estimate tool are for people who like efficiency. If you decide to go with the Power Wizard route, it only takes about five minutes (or less) of your time to find the best electricity plan available for you.

Here is how the Savings Estimate tool works:

1. Enter your zip code. Type in the zip code of your home.
2. Enter the square footage. Add in how many square feet your home is.
3. Input historical usage. Type in the amount of electricity you and your family typically use.
4. Sit back and relax. Five minutes (or less) later, Power Wizard reveals the best plan on the market for you.

While you may be comfortable with the electricity plan you have now or the plan that Power Wizard matches you with and helps you to sign up for, this can change.

As an added bonus, Power Wizard continues to monitor your electricity use and the available plans, rates, and perks on the market. If a better electricity plan for you comes along, Power Wizard lets you know.

You can then decide to switch plans again or not. If you do decide to switch to the suggested new plan, Power Wizard will help you register for the new plan and cancel your old plan (again).

Unplug Home Office Electronics When Not In Use

Did you know that electronics continue to draw or use electricity even when they are turned off?

Well, they do.

Another way you can save money on your home office electricity is to unplug your home office electronics when not in use.

Unplug:

• Lights
• Computers
• Printers
• Heaters
• Monitors

Adjust Thermostat to Reduce Home Office Electricity Expenses

Another huge electricity user is the heater and air conditioning in your home. One way to reduce home office electricity expenses is to adjust your thermostat.

In the summer, turn your thermostat up as high as you can while maintaining your comfort level. This prevents your air conditioner from kicking on more often, which reduces the electricity expense of cooling your home office.

In the winter, turn your thermostat down as low as possible while maintaining your comfort level. This prevents your heater from kicking on more often and will reduce the electricity expense of heating your home office.

You can also use blinds or curtains on your office windows to block out the sun and heat in the summer. Blinds and curtains can also help to prevent the cold air from seeping into your home office during the winter months.

Use Energy Efficient Electronics And Lighting

Install and use energy-efficient office equipment.

Install and use energy-efficient office equipment.

ENERGY STAR rated electronics can help you operate more energy efficiently, which also saves you money on your electricity.

This can be especially true since office equipment such as computers and printers can use a lot of electricity.

Use Natural Lighting, Heating And Cooling

Use natural resources as much as possible. Open curtains and blinds to let the natural daylight in as much as possible. This can alleviate you from having to turn on lighting in your office.

When it is sunny outside in the cooler months, let the sunshine in through your office windows to help warm or heat the room where your office is.

When it is cold outside, close the curtains or blinds to help trap the warm air inside your office. It can also help to keep the cold air from seeping through your windows.

If it is hot and sunny during the warmer months of the year, closing your curtains or blinds can help keep the room you use as your office cool.

Ready to start saving?