Dozens of employers are now hiring and working with remote workforces, or even outsourcing work to freelancers. Working remotely, employees can work from anywhere. Not only does this offer significant savings in overhead to employers, but it offers tremendous benefits to the employee as well.
If you are lucky enough to be able to work remotely, not only are you probably more comfortable and productive, but you can also take advantage of some key tax deductions.
The Home Office
If you work at home, you can take a deduction for a home office if a few simple things are true:
- It must be a separate room or space in your home that you only use for work. (mine has the dog kennels in it, but other than that it is used pretty exclusively for work)
- It must be used for a company you own or a job you hold. (working on your hobbies in it does not count)
- You must rent or own the home it is in. If you are using the spare room in your in-laws basement, that also does not count.
The home office deduction will be a percentage of the square footage of your home, or you can itemize deductions, which means you have to keep separate track of all of the expenses in your office, including utilities, a separate internet connection, and more.
For most remote workers, the standard home office deduction is the best way to go, unless you are extremely organized and spend a lot in your home office.
Equipment You Use
This includes things like your chair, your desk, a new monitor, a printer, paper, ink, your space heater, a shredder, and anything else you might use in your office.
There are a number of ways to deduct equipment purchases, including deducting depreciation year over year or deducting them as a one time expense. Depreciation is usually recommended for more expensive items you are not likely to purchase again for at least a few years.
Your Phone Bill
Do you use your personal phone for business, or do you have a separate business line? Either way, you can use what you pay for your phone plan (and if you buy a new phone) as a tax deduction.
Be careful with this. If you use your personal phone, you will need to track the amount of time you use it for business and figure a percentage. It is much easier if you have a dedicated business phone, and you should do so once your business justifies it.
Travel and Commuting
Do you commute to work once a week? Or do you travel to quarterly meetings? Does this involve expenses the company does not reimburse you for? You can take these as a tax deduction.
The easiest way to do this is to have a checking account or credit card you use only for business. That way, you do not have to sort out your deductions. However, you can use a program like Mint or Quickbooks to track them, and then import that information into your tax software at tax time.
These are just a few of the ways you can take advantage of working remotely when it comes to tax time. If you are not comfortable doing your taxes yourself, be sure to consult a tax professional.
However you do it, don’t let the tax advantages of you working remotely pass you by.
Also published on Medium.