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Do I Count Utilities on My Taxes?

Credits & Deductions Self-Employment Tax Tips Small Business Tax Filing
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In certain instances, utility costs can turn into a tax deduction when filing your tax return. Let’s take a look at some common examples.

Can I claim utilities on my taxes if I work from home and am self-employed?

You can deduct a portion of your home-related expenses, including utilities, if you use your home office exclusively for self-employment or business use. This is true whether you’re a homeowner or a renter. However, you cannot deduct these expenses if you are an employee who works from home. This deduction is only for self-employed individuals.

The portion of your deductible utility costs would depend on what percentage (in square feet) of your home you use exclusively for business purposes.

In addition to deducting a portion of your utility costs, you may also be able to deduct other home-related expenses using the home office deduction such as mortgage interest or rent, insurance, depreciation, or home repairs and maintenance.

You must meet specific requirements to claim home expenses as deductions. The IRS goes into more detail on these requirements in this article. And don’t forget, it’s also important to maintain thorough records of your business expenses to support your claim of this deduction in case the IRS asks.

Can I deduct utility costs for my rental properties?

Landlords are allowed to deduct operating expenses for their business, including utilities. If you cover utility bills like gas, water, electricity, internet, or cable for your tenants, you can deduct those costs from your taxes.

Can I deduct renewable energy upgrades made to my home?

Investing in renewable energy upgrades for your home in the U.S. can save you money on utilities and give you a nice tax break.

The Residential Clean Energy Credit and Energy Efficient Home Improvement Credit are available to homeowners making clean energy updates to their homes. The Inflation Reduction Act of 2022 made some changes to these tax credits, which we cover in more detail in this article. The credits cover things like installing electric or natural gas heat pumps, updating your exterior doors and windows, and installing clean energy systems (including solar, wind, geothermal heat pumps, and fuel cells).

To apply for these tax credits when filing your taxes, you’ll need IRS Form 5695.

This article is for informational purposes only and not legal or financial advice.

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