Aside from the flexibility and convenience of working from home, you can also benefit from a number of taxes you can write off from using your own space for business. The home office deduction is among the most popular benefits of work from home jobs, but there are more. Apart from the space, there are several other things you may not know about which qualify for tax deductions. Continue reading to get a comprehensive list of what can you write off while working from home.
11 Taxes You Can Write Off When Working from Home
1. Home Office Expenses
A home office is considered as space exclusively used for doing business. Whether you are a self-employed or an employed individual, you may deduct a portion of your expenses when computing for your taxable income. These expenses include but not limited to rent, mortgage, insurance, utilities, real estate taxes, and home repairs and maintenance costs. To determine the deductible home office expenses, you must clearly identify the percentage of your home used for conducting your business.
2. Office Equipment
You may also deduct home office equipment such as tables, chairs, computers, printers, telephone, and other equipment necessarily used in doing business. To qualify, any equipment must be used more than 50% of the time for your business. If you’re using a mobile phone to call clients or business partners most of the time, you may also include the cost of purchasing this device or the monthly bills you are paying for your subscription. The IRS, however, has a strict rule about this deduction, as deducting equipment unnecessary for your business may result in an audit and paying penalties.
3. Business and Office Supplies
The IRS also allows the deduction of business-related office supplies such as printing paper, pens and any other stationery used in the normal course of your business. The IRS clearly stipulates that for any office materials to be deducted, it is important you determine that those supplies are indeed necessary for running the business.
4. Software and Tech
When your work requires the use and access of online software, you may include this as deductible expenses as well. You can deduct any accounting software used for your invoicing or any CRM software used to run your business. Alternatively, you may deduct a monthly subscription to any installed mobile applications provided they are not for personal use.
5. Health Insurance
Healthcare expenses related to payments for treatment or prevention of any disease entitle you to deduct these costs in your taxable income. However, the total deductible amount should exceed 7.5% of your adjusted gross income. Additionally, this tax benefit only applies to self-employed individuals. In cases of employed individuals, you must prove that your employer does not provide any healthcare plan before you can claim this deduction.
6. Business-Related Travel Expenses
When your business requires you to travel for meeting clients and attending conferences, then you can also claim the expenses you incur as they are part of doing the normal course of your business. Any car expenses, airfare, hotel accommodations and miscellaneous expenses may form part of travel expenses.
7. Food and Leisure
To deduct any meals and entertainment expenses, they must be for official business purposes. You can not simply deduct the bills for a dinner meeting with your friends. It has to be dinner with clients or colleagues or your meals during business travels.
8. Marketing and Advertising Costs
When you use radio, print or online ads to advertise your business, it forms part of your marketing expenses you may deduct from your taxable income. This also includes business cards or any other materials you use to promote your business to clients.
The Bipartisan Budget Act was renewed last February 2018, allowing the education fees deduction for the taxable year 2017. Relatively any training, workshops, webinars, conventions, seminars, needed to grow your business may also be deducted. When you need to purchase training modules and books, you may include them provided they are needed to improve your skills in conducting the business.
10. Cost of Professional Services
When you use the services of an IT expert to develop your website or hired a CPA to organize your tax returns, you are paying the services of professionals. You may write off fees paid to a professional or independent contractor provided the service is for business purposes.
Aside from the expenses listed above, you may also deduct other expenses such as gifts to clients, banking fees, costs of shipping, and other miscellaneous fees. These deductions are reported as an itemized deduction on Form 1040 Schedule A.
Don’t forget to download, save, or share this handy infographic for reference:
These deductions are basically the same as those normal businesses with proper offices would deduct from their taxable revenues. The tricky part when working from home is distinguishing whether an expense is used for business or for personal use. That’s why you need to get yourself familiarized with the taxes you can write off to enjoy the tax benefits of working from home.
Do you know any other taxes you can write off when you work from home aside from our list above? Share it with us in the comments section below.