I joined the work-from-home club in March 2020, around the time COVID-19 forced thousands of other professionals to do the same. While many have since returned to the office, at least in some capacity, I’ve remained fully remote.
As a writer, my work requires little more than a decent laptop and reliable internet service. My company provides the laptop, but the internet bill is on me, and it’s not the cheapest internet, unfortunately.
For me and millions of other remote workers, who I'm sure can relate, high-speed internet is as essential to our work as our computer. Why do employers provide the laptop but not the internet for remote workers? As Tax Day is fast approaching, can I deduct the internet expense from my taxes? I looked into it. Here's what I discovered.
Employer reimbursem*nt varies by state
No federal law requires companies to compensate remote employees for home expenses such as internet service. The only exception is if said expenses lower the employee's average hourly wage below the federal minimum of $7.25, according to the Department of Labor.
State employment laws can require employers to cover at least part of the internet bill or other work-from-home expenses. California, for example, states in Labor Code 2802 that an employer "shall indemnify his or her employee for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties."
Locating local internet providers
For remote employees, home internet costs could certainly be considered a “necessary expenditure.” It may only be “necessary,” when the employee has no choice but to work from home. If going into the office is an option, but the employee chooses to work remotely, compensation for home office expenses, including internet, isn’t guaranteed.
A select few states -- Illinois, Montana, New Hampshire, North Dakota and South Dakota, plus Washington, D.C. -- have similar laws. Most don't, like my home state of South Carolina. In such states, a generous company may help cover internet costs or other work-from-home expenses voluntarily or by request, but I wouldn’t count on it.
What to expect if you’re eligible for reimbursem*nt
We use the internet for so much more than work. Since the employer is on the hook only for work-related expenses, it technically doesn’t have to cover time spent using the internet for streaming or any other non-work activities. If I worked 180 hours during a billing cycle that spans 720 hours, my employer would have to cover only a quarter or so of my bill -- and that’s only in states where the laws require it.
Similarly, an employer wouldn’t be required to compensate me for data overage fees because so many non-work activities also contribute to my monthly data use. Regardless of who’s paying the internet bill, it’s better to simply avoid overages altogether by managing internet data use or switching to a provider with unlimited data.
Even in states where laws require it, calculating how much your employer owes you can be a bit complicated, and for some, more trouble than it might be worth. Some employers may simplify things by offering remote employees a monthly stipend. The set amount can go toward internet bills, home office equipment or other expenses incurred as a result of working from home. If it covers the entire internet bill, great. If not, at least it’s something.
What if I’m in one state and my employer is in another?
Generally, wage and compensation laws apply to the state where the employee physically does the work, not the state where the company is located.
If I live in South Carolina but work remotely for a company based in Washington state, the employer would be required to meet South Carolina minimum wage requirements, despite Washington having the highest state minimum wage. The same logic applies to possible reimbursem*nt for home internet.
What if I live in California, but my employer is headquartered in a state where work-from-home expenses aren’t covered? That’s a bit more tricky and may vary by state. Such situations may require a conversation with HR or, in serious cases, an attorney specializing in employment law.
Are home internet costs tax deductible?
Another swing and miss here. The IRS makes it clear that employees (if you receive a W-2, that means you) aren't eligible to claim the home office deduction.
The Tax Cuts and Jobs Act of 2017 suspended tax write-offs for home deductions for employees through 2025, so the deduction may return in the future, but that won’t do me any good this tax season.
As with any good tax law, there are some exceptions to the home office deduction for employees. Eligible K-12 educators may qualify for the deduction, along with employees who incur work expenses related to an impairment, reservists in the armed forces, qualified performing artists and fee-basis state or local government officials.
Better luck for the self-employed
Work-from-home freelancers and small business owners may be eligible for the home office deduction. Conditions apply, but the main qualification, according to the IRS, is that the residence is the principal place of business, and there is “exclusive use of a portion of the home for conducting business on a regular basis.”
Those who qualify and rely on the internet to conduct business should include internet costs with Utility expenses when filling out Form 8829. If the taxpayer uses the same internet service for work and general home use, only the portion used for work can be deducted.
Fortunately, there are other ways to save
Internet service is a necessary expense when working from home, but employers aren’t obligated to help cover internet costs in many states, and there aren’t any tax deductions available. There are other practical ways to lower your home internet bill. Using your own Wi-Fi equipment, downgrading your plan or switching to another provider are just a few ways you can save on home internet.
For more ways to save around your home, check out CNET’s Home Tips section. For more information about possible tax deductions and taxes in general, be sure to visit CNET’s Taxes hub page.
