For many years I worked as an engineering consultant for a company that had a contract for engineering services to a government agency. For those services I received a 1099. Last year for business reasons I agreed to let them place me on their payroll. They withheld taxes and I received a W2 for 2017. I live far from the government offices and they never offered to provide and office space. In addition, I have valid in-home office expenses and pay for expensive software in order to provide my engineering services to them. The W-2 did not have the statutory box checked which ends up negating almost all of my office expense deductions. This company said they would change me to a statutory employee this year but they are resisting sending me a revised W2 with the statutory box checked. Any advice?
If you itemize deductions (Schedule A), you can deduct your home office expenses as job-related expenses. To qualify for the deduction, the home office must be used regularly and exclusively for business and it must be for the convenience of the employer. Additionally, you can deduct the cost of items that are ordinary and necessary to perform your job, such as the software you use for work. The job-related expenses won't be fully deductible as they are part of the miscellaneous deductions that are subject to the 2% rule. For more information, please see Employees Can Deduct Workplace Expenses.