Working From Home or "Telecommuting"
Many employers now offer telecommuting, or work-from-home programs. Some even provide you with the equipment and resources to create a home office. You may also get reimbursed for expenses spent on creating and maintaining a home office. This will vary by employer but it's worth looking into. Be sure to keep accurate and detailed records of the expenses necessary to establish and maintain your home office. If you're not reimbursed by your employer, you may be able to write off certain expenses related to your "Home Office" on your income tax return.
You can't just write off the cost of your PC, or a new suite of office furniture, just because you're now "working from home". Do your homework, and follow the current tax guidelines, and you can legally deduct certain expenses related to your home office. You may also be able to deduct percentages of your utility bills, relative to the size of your office compared to the rest of the house.
You'll also need to make sure you have the "proper environment" to work at home. You should have a separate area where you can concentrate on your job without being distracted by other things going on in your house. Ideally, this area would be a room with a door, so that you can actually close yourself off from the rest of the house when necessary. While sitting on the couch with your laptop in your lap may seem like a good idea at first, you may soon find that there are too many distractions to work effectively, not to mention that "ergonomics" will eventually catch up with you. Children playing, dogs barking, or other household noises can be very distracting when trying to work. Certain employers will actually require that you have a very specific area set aside for performing your jobs activities.
If your employer doesn't offer a telecommute or work-from-home program, you might want to start your own business out of your home.