Working At Home May Have Some Tax Benefits

September 9, 2020

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2020 is the year when millions of Americans shifted from working in the office to working at home.  According to government estimates, 35.2% of employees worked remotely in May, compared to 8.2% in February. While many have returned to the office, some are still working remotely. While filing taxes is probably not on the top of your mind right now, there is likely to be some confusion when it is time to file taxes.  In particular, the home office tax deduction. The IRS says that if you use your home part time or regularly and exclusively for business-related activity, you can write off associated rent, utilities, real estate taxes, repairs, maintenance and other related expenses. Sounds like you'll qualify since you have, or are still, working from home.  However the key to unlocking the home office tax deduction is your W-2. If you have taxes withheld from your paycheck, you cannot deduct unreimbursed job-related expenses such as rent, phone, Internet connection, etc. (at least through 2025). But if you’re a contract worker and receive a 1099 for those paid services, you may qualify for the home office tax deduction. A full explanation of exactly what qualifies for the home office tax deduction is in Publication 587, which isn't quite out for this year yet. Also, Congress may change their mind on the home office tax deduction in light of many more Americans working from home this year. Set up a calendar reminder to speak to a tax professional before filing your 2020 taxes to see if the rule can be applied to your situation.

SOURCE: Two Cents

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