Working from Home – Tax implications
A person in the 21st century has a very technical oriented job, or is employed by a company whose uses technology very extensively, could be a person who is working from home on a constant basis. Thusly, how could a person could claim a tax deduction, as an employee, due to the fact that he/she is working from home?
First of all to claim a tax deduction for working at home, one has to establish a “home office”. A home office is a designated area of one’s home that is dedicated to “exclusively used on a regular basis”, which has been interpreted that such a designated are of the home must be used 100% for business purposes. So, if a person puts something that is personal in nature (e.g. a TV or even a bed) in the designated area, it could destroy the 100%/exclusivity standing of the designated are of the home office. The second element to claim the tax deduction for working at home, for an employee, is that the designate area for the “home office” must be established for the employer’s convenience, rather than for the employee’s convenience, such as not providing an area for the employee to work at the employer’s office.
Once these two elements are established (for the self-employed only the first element must be met), then the expenses for the home (i.e. rent/mortgage interest, utilities, etc.) would be “indirect expenses” based on the percentage of business use, and the percentage is based on the square footage designated area that is used exclusively/100% for business use, versus the square footage of the entire home.
So if you are person that tends to work from home, because of the nature of your job (e.g. not having any other place to work from the employer’s office), please contact us, and we would be more than happy to see if you are eligible to claim the home office deduction.