WFH and tax deductions

[tripleshot]

I’ve been working from home since March 13 and started to wonder if I am able to/should deduct any expenses on our taxes. Does anyone have any good resources for this? I’m using my own home internet and have work calls forwarded to my personal cell phone, but I don’t get a ton of calls (maybe 3 a week).

[simpsongal]

I don't but I know deducting home office expenses is very tricky/hard to do - like you need a dedicated space for a home office used exclusively as a home office (e.g., no personal use, no kids using it). It also makes you a target for an audit.

But I'll be interested in other replies

[badgergrl]

I thought that was one of the major changes with the tax bill that trump passed- it eliminated a lot of those deductions.

Not a tax expert tho.

[Susie]

I'm planning to ask my accountant about this come 2020 tax time.  I'm self employed as a part owner of my firm, and have made significant investments in my home office set up to accommodate WFH.  An ergonomic chair, a new iMac and 2nd monitor, etc.  Obviously relying on my iPhone for work a lot more heavily than before, plus my home internet.  

I would have made those purchases regardless of tax implication, so I have not sweated it too much.  But it's certainly worth asking about before filing for 2020.

[wanderingback]

My partner has been self-employed his whole career and this year I finally used his accountant to make things simpler for both of us.
I don't know the ins and outs, but she asked me a lot of questions and I didn't do a good job about keeping track of my expenses from last year related to working at home, since I wasn't prepared to use an accountant, but my partner always keeps his receipts and uploads all his expenses to her.

As far as the home office goes, from my understanding is that they calculate a percentage to deduct based on your rent/mortgage and how many rooms are in your home. Again I could be wrong about the details, but she did ask me questions like that.
My partner has been using the same accountant for many many many years as self-employed with deductions and has never been audited.

So I'd recommend that you figure out a way to keep track of your expenses now and then plan to use an accountant to help you next year, that's what I'm planning to do to be better prepared for next year.

[kadams767]

Keep in mind, if you are an employee (ie. you get a W-2 and are not a contractor or considered self-employed), you aren't eligible for home office deductions anymore.

[heliocentric]

I'm an employee who has worked from home for years (my choice) and so was never able to claim any deductions. Last year DH started his own business and now we can claim home office deductions--but only for him. It does require a dedicated office space. I believe there are two ways to calculate, but we do it based on the % square feet of the office in relation to the rest of the house.

My employer provides my computer, cell phone, & related equipment. This includes an allowance for home office furniture. They also allow me to expense a portion of my internet bill. This only applies to employees that are officially remote, not people working from home due to the pandemic. (They were allowed to take home monitors, chairs, docking stations, etc. to use at home temporarily.)

Based on everything I've read, but I don't think you'd be eligible for any deductions. Maybe your employer would be willing to pay part of your phone or internet bill since you're using them work, though?

www.forbes.com/sites/davidrae/2020/05/06/home-office-deduction-2020/#3fa913987f75

[heliocentric]

www.irs.gov/publications/p587

[Susie]

heliocentric, I'm looking at that flow chart and I'm wondering how to apply that to 2020.  "Do you meet patients, clients, or customers in your home?"  In person?  No, but then, pre-pandemic I didn't generally meet my clients in my work office either.  Most of my clients are corporate and in normal times we do a combination of phone, video conference, and me traveling for meetings at their sites.  Now we've (temporarily) suspended travel, and I do phone and zoom meetings from home.  It's just as much a meeting as I did before... but would it count?  IDK!  And it seems that would be the relevant question for me.

I think this is going to get pretty messy.

[heliocentric]

Susie,I'm not sure. That does seem confusing. This is not my area of expertise by any means and my job doesn't involve meetings with clients so I hadn't even considered that. It sounds like you have an accountant, so I'd probably keep really good records and consult with them. That way you're not scrambling for documentation if you can take the deduction.

Leave it to the US to make taxes so complex.

[tripleshot]

Jul 22, 2020 13:00:03 GMT -5 kadams767 said:

Keep in mind, if you are an employee (ie. you get a W-2 and are not a contractor or considered self-employed), you aren't eligible for home office deductions anymore.

That’s my situation. Darn it.

[pumpkin]

I worked from home at least 50% of the time, pre-COVID, for the last couple of years and every year I ask my accountant about this and basically the answer is no. I have a desk set-up that is just for work, use my home internet, etc, but am never able to deduct anything unfortunately. 🙁

[niq]

*this is getting very close to tax/legal advice and at some point you should consult a tax professional*

It's possible that expenses related to equipment for your home office may be deductible, even if the "home office deduction" for the square footage in your house is not deductible. So if you bought a new desk, computer equipment, printing supplies, etc., that you use exclusively for WFH, that might be deductible. Keep in mind that unreimbursed business expenses have to be above 2% of Adjusted Gross Income before anything is deductible.

But I would at least ask an accountant about this. If you're an employee you might ask for some guidance, though they might reply with some boilerplate "that's tax advice, we're not gonna do that".

[kadams767]

Jul 22, 2020 23:07:43 GMT -5 niq said:

*this is getting very close to tax/legal advice and at some point you should consult a tax professional*

It's possible that expenses related to equipment for your home office may be deductible, even if the "home office deduction" for the square footage in your house is not deductible. So if you bought a new desk, computer equipment, printing supplies, etc., that you use exclusively for WFH, that might be deductible. Keep in mind that unreimbursed business expenses have to be above 2% of Adjusted Gross Income before anything is deductible.

But I would at least ask an accountant about this. If you're an employee you might ask for some guidance, though they might reply with some boilerplate "that's tax advice, we're not gonna do that".

The deduction for misc. expenses above 2% AGI is no longer allowed.  If you are a regular employee, you can itemize certain unreimbursed business expenses only if you fall into one of 4 very specific categories:  

Armed Forces reservists.

Qualified performing artists.

Fee-basis state or local government officials.

Employees with impairment-related work expenses.


www.irs.gov/publications/p529