Bill Overview
Title: Home Office Deduction Act of 2022
Description: This bill allows a tax deduction during the period beginning on March 13, 2020, and ending on December 31, 2022, for the trade or business expenses of employees who do not itemize their tax deductions. The amount of such deduction is subject to a phaseout based on the taxpayer's modified adjusted gross income.
Sponsors: Rep. Morelle, Joseph D. [D-NY-25]
Target Audience
Population: Employees working from home who do not itemize deductions
Estimated Size: 35000000
- The target population is employees who work from home and do not itemize deductions, to be eligible for the deduction.
- Work-from-home arrangements have increased significantly since the onset of the COVID-19 pandemic, leading to a substantial number of employees working remotely.
- The deduction is only applicable for a specified time period (March 13, 2020, to December 31, 2022), implying that those who meet the criteria during this time will benefit.
- The phaseout based on modified adjusted gross income suggests a focus on middle-and lower-income employees, as higher earners may not benefit from this deduction.
- It applies to employees across various industries that enabled remote work during the pandemic.
Reasoning
- The policy targets employees working from home who do not itemize deductions. This segment is likely to include younger employees, as well as middle-to-lower-income brackets since high-income individuals are more likely to itemize deductions.
- Not all eligible employees will claim the deduction due to a lack of awareness or complexity, leading to differential impacts across various groups.
- The policy has a defined budget of $8 billion in the first year and $27.05 billion over ten years. Therefore, it is important to consider the average deduction benefit per person and the total population to project its effectiveness and reach.
Simulated Interviews
Software Developer (Houston, TX)
Age: 28 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 3.0 years
Commonness: 8/20
Statement of Opinion:
- I've been working from home since March 2020. Initially, I didn't know I could deduct some expenses.
- This policy sounds beneficial, especially for people like me who have been handling internet and office furniture costs.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 8 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 8 | 5 |
| Year 20 | 6 | 5 |
Project Manager (New York, NY)
Age: 35 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 2.0 years
Commonness: 7/20
Statement of Opinion:
- I earn close to the phaseout threshold, so I'm unsure how much I'd benefit.
- Still, the policy is a good initiative, but may not be very impactful for high-salaried individuals.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 7 | 6 |
| Year 5 | 7 | 6 |
| Year 10 | 6 | 5 |
| Year 20 | 5 | 5 |
Customer Support Specialist (Chicago, IL)
Age: 45 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 5.0 years
Commonness: 5/20
Statement of Opinion:
- Any financial help is welcome, as I've spent quite a bit getting my home office set up.
- This deduction will definitely ease some financial stress for my family.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 5 |
| Year 2 | 7 | 5 |
| Year 3 | 8 | 5 |
| Year 5 | 8 | 5 |
| Year 10 | 7 | 4 |
| Year 20 | 6 | 4 |
Graphic Designer (Los Angeles, CA)
Age: 50 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 3.0 years
Commonness: 6/20
Statement of Opinion:
- I think it's great for people who are newly remote, but as a long-time freelancer, it's not new to me to manage work expenses.
- This might not change much for my tax situation, but it's appreciated.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 6 | 5 |
| Year 5 | 6 | 5 |
| Year 10 | 5 | 4 |
| Year 20 | 4 | 4 |
Online Sales Manager (Miami, FL)
Age: 32 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 3.0 years
Commonness: 8/20
Statement of Opinion:
- I've appreciated the remote work setup and the cost savings on commuting.
- This policy makes remote work even more beneficial financially.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 9 | 7 |
| Year 5 | 9 | 7 |
| Year 10 | 7 | 6 |
| Year 20 | 6 | 6 |
Marketing Analyst (Phoenix, AZ)
Age: 29 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 8/20
Statement of Opinion:
- Any extra savings help since I've been cutting costs extensively.
- Policy might encourage more people to maintain remote work flexibility.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 6 |
| Year 2 | 8 | 6 |
| Year 3 | 8 | 5 |
| Year 5 | 8 | 5 |
| Year 10 | 7 | 4 |
| Year 20 | 6 | 4 |
Senior Accountant (Austin, TX)
Age: 58 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 2.0 years
Commonness: 4/20
Statement of Opinion:
- Not much changes for me since I'm nearing retirement.
- Good for younger employees who are adjusting to remote work though.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 7 | 6 |
| Year 5 | 6 | 5 |
| Year 10 | 6 | 5 |
| Year 20 | 5 | 4 |
Data Scientist (Seattle, WA)
Age: 39 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 5/20
Statement of Opinion:
- Ordering extra office furniture and supplies for home has been expensive.
- Relief from tax deduction is a positive step, helps cover some expenses.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 6 |
| Year 2 | 8 | 6 |
| Year 3 | 9 | 7 |
| Year 5 | 8 | 6 |
| Year 10 | 7 | 5 |
| Year 20 | 6 | 4 |
Customer Service Agent (Denver, CO)
Age: 26 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 3.0 years
Commonness: 9/20
Statement of Opinion:
- I'm new to remote work and any savings are appreciated with my current costs.
- This deduction is a welcome help for people adjusting to a new work environment.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 8 | 6 |
| Year 3 | 8 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 7 | 5 |
| Year 20 | 6 | 5 |
Human Resources Manager (Boise, ID)
Age: 60 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 0.0 years
Commonness: 3/20
Statement of Opinion:
- Given my career stage, the policy won't significantly affect me.
- I understand its importance for younger employees setting up home offices.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 7 | 6 |
| Year 5 | 6 | 5 |
| Year 10 | 6 | 5 |
| Year 20 | 5 | 4 |
Cost Estimates
Year 1: $8000000000 (Low: $7000000000, High: $8500000000)
Year 2: $7800000000 (Low: $7000000000, High: $8200000000)
Year 3: $7500000000 (Low: $6800000000, High: $7950000000)
Year 5: $0 (Low: $0, High: $0)
Year 10: $0 (Low: $0, High: $0)
Year 100: $0 (Low: $0, High: $0)
Key Considerations
- Retroactive nature implies the need for immediate adjustment of tax filings and collections leading to fiscal shifts in short order.
- The phaseout feature necessitates careful income-target verification among beneficiaries, potentially involving administrative overheads.
- The widespread shift to remote work creates significant demand for such deductions, but similar movements toward returning to workplaces in subsequent years may alter long-term demand.