![]() Items you might deduct include cellphones, laptops, printers, and other office supplies. Yes, if they are both common to your industry and necessary to help your business and you have receipts. There isn’t a limit on how much you can deduct.Įxpensive utilities: Even with a mild winter, more Americans struggle to pay their energy billsįairness: A 30% national sales tax? Abolishing the IRS? What the FairTax Act of 2023 would do. If you had $10,000 in eligible home-related expenses, you could claim up to $2,500 in deductions. ![]() For example, if your office is 250 square feet and your home is 1,000 square feet, you'd deduct 25% of your allowable expenses (250/1,000 = 0.25). You can also claim deductions for a portion of other expenses such as rent or property taxes, home depreciation and utilities based on the proportion of the space to the rest of your house. “If you have a spare bedroom and made repairs to turn it into an office – added built-in shelving, painted it to get it ready for zoom meetings, for example – all that can be counted toward home office expenses,” Tippie said. This could result in a larger deduction but requires you to track all your home office expenses, including any costs related to repairing and maintaining the space. ![]() If you only use that space part of the time, then you prorate that amount, Tippie said. You can deduct $5 per square foot, up to $1,500 or 300 square feet, per year for your exclusive home office space if it's used for the full year. There are two ways to take a deduction for your home office space. “But you could purchase a desk and have it in a corner of your house and if that’s used exclusively and regularly for work, you can deduct that space.” “If you work on your dining table, you can't deduct that because it’s not used exclusively for work,” said Therese Tippie, EP Wealth Advisors’ tax manager and financial planner. If your home office is used exclusively and regularly for your self-employment, you may be able to deduct a portion of your home-related expenses, such as mortgage interest, property taxes, homeowners' insurance, and utilities. Generally, if you receive a W-2 wages tax document, you’re not eligible unless you also have a side gig that you do from home. ![]() Who qualifies for home office deductions? Need to know: Are you ready to file your taxes? Here's everything you need to know to file taxes in 2023. Here’s a step-by-step guide for figuring out if you qualify for deductions and if so, what to consider in your calculations: Home office deductions now mostly apply to small business owners who are self-employed. If you do freelance work unrelated to your regular job at home, you might qualify. The rules are strict, though, and calculating your deductions can be complicated. The 2017 Tax Cuts and Jobs Act eliminated unreimbursed itemized deductions for employees, and Congress never brought them back despite a surge in people working from home.Īmong those who have a workplace outside of their home, 61% said they’re choosing not to go into their workplace, up from 36% near the start of the pandemic in 2020, according to the Pew Research Center last year. That’s because wage employees who choose to work from home take on the full weight of their related expenses. If your company’s allowing you to work from home, that convenience may be costing you more than you think when it comes to your taxes.
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