If you’ve been working remotely during this pandemic, you’ve probably spent some money on your home office. Some people can get some tax write-offs for that. Others can’t.
I know, it’s a bummer.
But that doesn’t mean you’re out of all the money you’ve spent to set up that sweet kitchen table office or basement workspace or a shelf full of office supplies.
Lara Forte, a senior loan officer with TCF Bank, has been working from her home in Birmingham since the end of March due to the pandemic.
“We thought it was a short-term thing so, you figure out your laptop. You’re kind of excited to still be in your pajamas,” Forte recalled.
But soon she realized the bedroom desk she’d set up was going to be her work space a bit longer, and her dog“Buddy” was going to be her new office mate.
With three daughters quarantining with her – two then in high school and one in college – and all using the Wi-Fi, increasing bandwidth was the first big expense. She also had to buy some additional electrical cords.
“Then what you don’t think about is the really basic stuff like going to the copy room and grabbing a new pad of paper and grabbing staplers and grabbing pencils and things like that,” Forte explained.
She estimates she’s spent $250 to $400 to set up her home office.
WHICH AT-HOME WORKERS GET A TAX BREAK
Some people are wondering if they can write-off any of these expenses.
Unfortunately, recent changes in tax law exclude many workers.
“It depends on how they’re doing that work from home,” explained Patty Hutson, principal CPA with Jenkins & Company Certified Public Accountants in Southfield.
Hutson said if you are an independent contractor – who is self-employed – and now working from home, good news!
You can deduct any expenses you incur that are ordinary and necessary and related to your self-employment.
Hutson said that can include mortgage interest, real estate taxes, utilities, repairs, home maintenance, and more.
Use IRS Form 8829 to calculate your deduction.
Hutson said there is a simplified method, too. It’s is a flat rate -- $5 per square foot of home office space equals your deduction.
But if you are a W-2 worker, what home office deduction can you get?
Hutson gets this questions a lot.
“I take a deep breath and say, ‘Nothing,’” Hutson said.
Yeah, not good news.
KEEP YOUR RECEIPTS
But Hutson recommended you approach your employer with receipts and ask for reimbursement. If they offer you a lump sum, though, take note:
“If you are simply given a stipend -- if you are simply given a lump sum amount with no accountability back for what you’ve spent it on -- that is going to ultimately end up as taxable income for you at the end of the year,” explained Hutson.
Lara Forte is a W-2 workers, and she’s been pretty good about saving most receipts.
“I would say some I have, and some you just want to check the box and move on,” she said.
Fortunately, Forte has submitted expense reports to her employer and has had no problem getting reimbursed.
Bottom line, contract workers get the home office deductions. W-2 workers do not.
If you are a W-2 worker who has chosen to work at home or been asked to relocate there, keep track of your receipts and ask to be reimbursed.
A reimbursement never becomes taxable income.