There has been a surge in remote work since 2020, qualifying employees for certain tax deductions.
Tax Deductions for Remote Workers
Generally, your home office must be used for the sole purpose of your work to qualify for deductions on your tax return. Expenses such as internet, phone bills, and similar items could also be for personal use. Items you might consider deducting would be a computer purchase for the sole use of your job, a special phone line, other equipment and materials required for your work, or maintenance for the upkeep of said equipment.
Another qualifying factor for a home office would be a space that is utilized specifically for meeting with clients. If your work requires you to have a physical space to host meetings, store inventory, or to conduct business that is not virtual, you may qualify for deductions when you file.
Leased Office Space for Remote Workers
As a self-employed or remote worker, you may have a separate space for your work. However, a leased office, or a workstation located on premises that is not your home would not qualify as a home office. The IRS will see this as an optional work environment.
Records and Receipts for Remote Workers
No matter your work location, it is imperative that you document and keep track of all records pertaining to work-related purchases. Receipts and records are the only tangible evidence of your expenses that can qualify you for deductions. You must know the exact dollar amount of your expenses; estimations of round, even numbers will often flag your return.
Too many round numbers for your expenses could trigger an audit.
Simplified and Direct Deductions: What’s the difference?
The simplified method for home office deductions is done by expensing $5 per square foot of your office, up to 300 square feet max. This method can qualify up to $1,500 in deductions.
The direct method requires you to track all your expenses and maintenance costs for your home office. This method allows you to qualify for a bigger deduction.
Tax Debt Relief for Remote Workers
Whether you work from home or in an office, Optima assists self-employed and W-2 workers with tax liabilities. Give us a call at 800-536-0734 for a free consultation today.
