Work from Home Tax Deductions: What You Should Know

Work from Home Tax Deductions: What You Should Know

The COVID-19 pandemic has changed the way we work, with many people forced to work from home. While it has its advantages, like avoiding long commutes and being close to family, it also has its share of challenges. One such challenge is the blurred line between work and personal life, and another is tax deductions. In this article, we will discuss all you need to know about work from home tax deductions.

What is a Tax Deduction?

A tax deduction is an expense that reduces the income that is subject to tax. It reduces the amount of taxes owed, resulting in a lower tax bill. Tax deductions can be claimed on various expenses, including work-related expenses.

Expenses You Can Deduct

If you are working from home, there are several expenses that you may be able to deduct from your taxes. Here are some of the expenses you can deduct:

Home Office Expenses

If you use a part of your home solely for work purposes, you can deduct a portion of your rent or mortgage, property taxes, utilities, and insurance. You can also deduct expenses related to repairs and maintenance.

Office Supplies and Equipment

You can deduct expenses incurred on office supplies, such as stationery, pens, paper, and printer ink. You can also deduct expenses on office equipment like computers, laptops, tablets, and printers, but only if used exclusively for work purposes.

Internet and Phone Bills

If you use the internet and phone for work purposes, you can deduct a portion of these expenses. However, you need to maintain a log to prove that these expenses were incurred while working.

Expenses You Cannot Deduct

Not all expenses incurred while working from home can be deducted. Here are some of the expenses you cannot deduct:

Non-Work Related Expenses

Expenses that are not related to your work cannot be deducted. For example, your personal phone or internet bill or the monthly subscription for your streaming service.

Expenses Covered by Employer

If your employer reimburses you for some of the expenses, you cannot claim them as deductions.

How to Claim Work from Home Tax Deductions

You can claim work from home tax deductions when filing your tax return. However, claiming deductions can be complicated, so it’s always best to consult a tax professional.

Conclusion

Working from home has become the new norm for many people. While it does have its advantages, it also comes with its share of challenges, including tax deductions. As mentioned above, there are various expenses that you can deduct, such as home office expenses, office supplies and equipment, and internet and phone bills. However, claiming deductions can be complicated, so it’s best to consult with a tax professional to ensure that you are deducting the right expenses.