Coworking memberships are tax deductible in many situations. Here are the rules that apply.
Can you deduct a coworking membership as an employee?
With more jobs going remote, it’s becoming more common for employees to join a coworking space instead of working from home.
If you’re a W-2 employee, you generally can’t deduct a coworking membership. Employees can’t deduct business expenses.
If you don’t want to pay for your coworking membership from your taxable income, you have two options.
- Convince your employer to pay for it.
- Convince your employer to reimburse your expenses.
An employer paying for business expenses is generally not taxable income.
Can you deduct a coworking membership as an employer?
If you’re an employer, buying coworking memberships for you and your employees is generally a deductible business expense. This is assuming they’re using the membership to do work for you.
A coworking membership is similar to renting traditional office space or subscribing to business services your employees use to do work.
Can you deduct a coworking membership as a freelancer, independent contractor, or sole proprietor?
You can generally deduct a coworking membership as a freelancer, independent contractor, sole proprietor, or other business entity. Your coworking membership counts as an office expense.
Having a coworking membership may make you ineligible for the home office deduction. To qualify for the home office deduction, your home office generally needs to be your principal place of business. If you primarily work in a coworking space, you would generally not be able to claim a home office. If you primarily work from home and only maintain a coworking membership to have access to meeting space, you may be able to claim both deductions.
Claimin a coworking membership is relatively straightforward. You’d simply enter the cost of your membership on your Schedule C as an office expense.
Can you deduct coworking parking expenses?
You generally can’t deduct the cost of parking at your place of business. This includes a coworking space.
Parking fees are considered commuting costs. Commuting costs are not deductible. Parking fees are generally only deductible when you visit a client at another location or are on a business trip away from your home area.
You may want to consider choosing a coworking space with access to free parking or that includes free parking in the cost of the membership.
Can you deduct mileage to your coworking space?
Driving between your home and coworking space is generally not deductible. You can’t deduct your commuting expenses.
You can deduct business trips. A business trip is something like driving from your coworking space to meet a client.
Are you looking for a coworking space?
If you’re looking for a coworking space, two popular options are Spaces and Industrious. Both have locations throughout the United States and all over the world. Plans range from part-time coworking memberships to fully private memberships. Check them out now to see if they’re right for you.