When considering whether you want to take a position where you telecommute, consider the fact that you may be able to write-off part of your home if you work for a company that you communicate strictly by email, mail, telephone, video etc. Always speak with your Accountant in detail about your individual situation.
There are tax deductions that you can use if your home office is being used at the convenience of your employer. The convenience of the employer requirement is satisfied if:
- You maintain your home office as a condition of employment-in other words, if your employer specifically requires you to maintain the home office and work there
- Your home office is necessary for the functioning of your employer’s business; or
- Your home office is necessary to allow you to perform your duties as an employee properly.
Now that we established whether or not your home office is used for your employer, let’s talk about how your home office space is eligible. You must use this office space regularly and consistently for work. The space cannot have dual uses such as spare bedroom for guests throughout the year, kids play room after hours etc. Get where I’m going?
You will need to figure out what the square footage of your office space is. You should be able to deduct a portion or % of your expenses based off the square footage. Again, talk to your Accountant. If you do have a dedicated home office space, here are some things that may be a tax write-off at the end of the year.
- Mortgage / rent
- Homeowner’s / renter’s insurance
- HOA fees
- Real estate taxes
- Electric
- Heating fuel – gas / oil
- Internet
- Water / Sewer
I highly recommend creating a simple spreadsheet like you see in the example below that you can bring with you at the end of the year to your Accountant. Again, make sure you know the square footage of your Home and the square footage of your dedicated office space so the Accountant can figure out what % of your expenses can be deducted.
Not only is your office space deductible but anything you purchase soley for the use of your job if your employer does not provide these for you or reimburse you for your expenses. Some examples are:
- Computer / laptop
- Headset
- Mouse / mouse pad
- Keyboard
- Extra screens
- Blue light glasses
- Printer
- Copy paper
- Shredder
The total home-related expenses will be multiplied by the percentage of “business use” of the home to determine the tax deductible amount
The IRS also requires that you disclose the percentage of time you spend conducting business inside the home office.
As you can see, there are some great benefits to working from home. This list is something to consider when you are considering taking a pay cut as you may not necessarily be “taking a pay cut” with some of the perks of working from a dedicated home office space.
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