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What Are the Tax Deductions for Telecommuters

ProActive Tax SolutionsBusiness Tax Help What Are the Tax Deductions for Telecommuters
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What Are the Tax Deductions for Telecommuters

In 2015, according to a Gallup poll, 37% of US workers telecommuted for work.

Indeed.com reportedly saw a 36% increase in job seekers pursuing “telecommute” roles in 2016. The company also saw an 89.5% increase in the search term “remote jobs” being used by job seekers.

While many employees only telecommute 2 days a week, on average, you may be working from a home office on a more regular basis. If you are, you could be curious about the tax implications.

You may also be incurring more expenses than you expected to make sure you have what you need to work at home. What will your employer reimburse you for and what can you deduct?

Taking Deductions for a Home Office

An employee working from a home office must be doing so for the convenience of the employer, not for you, the employee. So, if you’ve convinced your employer that you need the quite of a home office to concentrate, or you’ve bought the only home you can afford too far away to commute to the office every day – you won’t be able to take the deduction.

If instead, your employer decided to save some money on rent by rotating staff out of the office, you could take that home office deduction – if you meet certain requirements.

Other Rules Apply

Your home office must be a specific area of the home used be used often enough to be considered fair use.

The rules differ somewhat for an independent contractor, as the office deduction must be included in a Schedule C.

Then, there is the issue of how you factor the home office deduction. Do you calculate the deduction based on the percentage of your home used for business or do you use the simplified option, based on $5 per square foot, not to exceed 300 square feet?

Decisions, decisions.

As with many other areas of tax law, the rules governing home office deductions are complicated – much like the 2% rule:

  • Unreimbursed business expenses, like traveling costs, mileage, business gifts, education (fees, tuition and books) and home office expenses, will only receive a deduction that is greater than 2 percent of your adjusted gross income.

Reimbursed vs. Unreimbursed Expenses

Some employees may receive a modest expense account to outfit a home office with the necessary office equipment and supplies to do business. If you don’t have an account or won’t be reimbursed and you end up buying those items yourself, you may be able to deduct them from your taxes.

Tax laws are not simple. You may want to seek the advice of a tax professional to be sure you are getting all the tax saving options available to you. It’s possible too, that taking the standard deduction is your best choice.

At ProActive Tax Solutions, we offer to our clients sound advice and great service. Give us a call today, to schedule a risk-free, no obligation consultation in our Corte Madera office.