Who Should Foot the Bill for Your Work-From-Home Internet? Employer or IRS?

For the millions of people working from home, a high-speed internet connection is as essential as the computer itself. While employers typically provide the necessary equipment, remote employees are usually responsible for their own internet costs. However, there’s a possibility that employers might be required to compensate for some or all of these expenses, including internet costs. Here’s what you need to know:

Employer Reimbursement for Home Internet Varies by State

No federal law mandates that companies compensate remote employees for home expenses such as internet service. The only exception is if such expenses lower the employee's average hourly wage below the federal minimum of $7.25, according to the Department of Labor.

State laws may require employers to cover at least part of the internet bill. For instance, California’s Labor Code 2802 states 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."

If an employee has no choice but to work from home, internet costs could be considered necessary expenditures. However, if working from the office is an option, compensation for home office expenses isn’t guaranteed.

A few states, including Illinois, Montana, New Hampshire, North Dakota, and South Dakota, have similar laws, while many states do not.

What to Expect if You’re Eligible for Home Internet Reimbursement

Employers are only responsible for work-related expenses. For example, if you worked 180 hours during an internet billing cycle of 720 hours, your employer would cover only a quarter of your bill in states where the law requires it. Additionally, employers aren’t obligated to cover data overage fees due to non-work activities.

Some employers may simplify the reimbursement process by providing a monthly stipend to cover internet bills, home office equipment, or other work-from-home expenses.

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 works, not the employer's location. This means if you live in a state with laws that require internet reimbursement, your employer must comply with those laws, even if they are located in a different state.

Are Home Internet Costs Tax Deductible?

Unfortunately, the IRS does not allow employees receiving a W-2 to claim the home office deduction. The Tax Cuts and Jobs Act of 2017 suspended these tax write-offs for employees through 2025, although certain exceptions may apply for specific groups.

Better Luck for the Self-Employed

Freelancers and small business owners may qualify for the home office deduction if their residence is their principal place of business and they use part of their home exclusively for business.

Fortunately, There Are Other Ways to Save

While employers aren’t obligated to cover internet costs in many states, there are other practical ways to save on your home internet bill. Consider using your own Wi-Fi equipment, downgrading your plan, or switching providers to find better deals. For more tips on saving at home, check out CNET’s Home Tips section.