Employees who are required by the employer to have an office in their home are allowed to deduct the allowable expenses on Form 2106 as unreimbursed employee business expenses. With no other business location, there is an obvious need for you to have an office in home. There are other options. The corporation can set up an accountable plan and reimburse the employee's out of pocket expenses. The S corporation claims a deduction for the expenses and the employee has no income to report. The corporation could pay rent to the employee. Under this option the employee is not allowed to deduct expenses when they rent part of their dwelling unit to their employer.