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WFH TAX DEDUCTIONS EXPLAINED: WHO QUALIFIES AND HOW TO CLAIM THEM

WFH TAX DEDUCTIONS EXPLAINED: WHO QUALIFIES AND HOW TO CLAIM THEM

While the average employee does not qualify for work from home tax deductions, business owners and the self-employed, like freelancers or gig workers, can potentially use them to subtract business expenses from revenue and lower their tax liability.

Partner Mark Witte said W2 employees will not be able to deduct their work-related expenses, largely due to the Tax Cuts and Jobs Act. "Miscellaneous itemized deductions prior to 2018 used to be claimed on Schedule A, but since the Tax Cuts and Jobs Act, those deductions really went away. So for W2 employees, it's really difficult to be able to take any kind of [work-related] deduction at all," he explained. "Potentially, once that expires, W2 employees could take deductions again. I haven't seen anything on the horizon to speed up that deadline."

To actually claim the deductions, Witte noted, "They should keep [records] of any kind of potential expenses that are deemed reasonable and necessary for them to operate their business and generate their revenue.." It can be as simple as an Excel spreadsheet recording the year's expenses, according to Witte. "If they deal with a financial professional or a tax preparer, they can certainly bounce ideas off of them," he said. "They could keep a simple Excel spreadsheet, listing down all the money they spend that they think relates to the business, and then with the CPA they can hash out what qualifies, or if something has some personal use to it, then maybe they can take a piece of that expense."

Witte also advised keeping a separate business bank account to easily keep track of business expenses without worrying about any crossover from personal expenses.

 

Read the full article published by Business Insider.

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