After the outbreak forced the closure of several companies earlier this year, employers were obliged to adjust to the growing trend of remote work arrangements. For some businesses, leaving the workplace has taken months.
No matter if your home office is a temporary or long-term arrangement, there’s a high chance you have some worries about how it may impact your taxes. We’ll talk about how your situation might be affected by changes in tax law and the simplified home office deduction with remote workers or even those in the gig economy.
How much is the home office deduction?
You could be able to deduct costs associated with using your home for remote work if you’re a homeowner or renter, regardless of whether you’re an independent contractor or otherwise self-employed. The federal home office deduction can be used to offset expenses like rent or mortgage payments and other work-related expenses.
For home-based business expenses, are employees eligible for tax deductions?
Sad to say, but employees may no longer use the home office deduction. Before tax year 2018, employees who complied with the “convenience of employer” requirement qualified for a deduction for the costs associated with working from home. Even if your business has to close down or take other actions that prevent you from working at an office, you are no longer qualified to claim the home office deduction because of the COVID-19 issue.
Office at home tax deduction?
The home office tax deduction is available to anyone working for themselves and doing so from their house. The notion of “profit-seeking” does not apply to these behaviors, though. The home office deduction is not available if you often trade equities online.
If you meet a few basic criteria, work-from-home expenses may be written off as a tax deduction. The terms mentioned need to be met in order to apply either strategy:
In the absence of any other choice, use frequently.
Your home’s remote workspace cannot be used for both personal and professional purposes at the same time. But a kitchen table is not considered a “dedicated space,” according to the definition.
Major site of the business.
It’s critical that you conduct all of your work from your home office and that you do not conduct a sizable amount of it elsewhere.
Even if you use a portion of your home as a storage space for inventory or product samples, it doesn’t matter if this isn’t where you primarily do business. You should benefit from the home office tax deduction or the moving expenses tax deduction.
People who work from home have increased this year, and they are aware of the potential additional expenses that could result. Understanding the home office tax deduction may help you recoup some of the expenses you incur when filing and preparing your taxes, which can be onerous. If you have any more questions, speak with an attorney or a competent public accountant for additional deductions to avoid an IRS audit notice. You can also use the app FlyFin to access their CPAs. Be sure to take advantage of a 1099 tax calculator to make accurate tax filing.