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Did you know that remote workers are eligible for many of the same tax deductions as those who work from an office? As long as your home office is used exclusively for business, you can deduct a number of expenses. Some are more obvious than others. For example, if you have a dedicated home office space, you can deduct that portion of your rent, utilities and maintenance costs. You can also deduct the cost of internet and phone expenses associated with your business. However, there are many less-known tax breaks that remote workers can take advantage of. Here are 5 remote work tax deductions that can save you money!
Deduct Home Office Costs
If you have a home office that is used exclusively for business, you can deduct the portion of your rent, utilities and maintenance costs that are related to that space. You can also deduct the cost of internet and any phone expenses relating to your business. This is true even if you have a home office that you use for personal activities as well. The key is to ensure that your home office is used only for business purposes. This can be challenging at times, but it is important to maintain accurate records to make sure you don’t overstate your deductions and get into tax trouble.
Equipment and Software
If you use specific equipment or software to perform your job remotely, you can deduct the cost. For example, if you use an online meeting service to host video calls with your team, you can deduct the cost of your subscription. Or, if you use a voice recognition software to dictate notes for your articles, you can deduct the cost of that software. Be careful though, you can’t deduct general office supplies, like pens and paper, even if you use them to perform your job remotely.
Some employees may not realize that they can deduct the cost of their commute. If you regularly drive from your home to your workplace, you can deduct the cost of your commute as a remote work tax deduction. However, if you only travel between home and your employer’s office once or twice a year, you can’t deduct this as a remote work tax deduction. You can only deduct commuting costs if they are part of a regular commute.
If you hire remote workers who travel to perform their duties, you can deduct many of the costs related to their travel. For example, if you hire a remote employee to host a meeting in your office, you can deduct their travel costs. If you hire a remote employee to travel to your client’s office on a weekly basis, you can also deduct their travel costs. However, there are some restrictions here. For example, if you hire a remote employee to travel to your client’s office once a year, you can’t deduct their travel costs. There needs to be a regular pattern of travel. The same is true for remote workers who regularly visit your office. If you hire remote employees who travel to your office on a regular basis, you can deduct their travel costs.
Recordkeeping Is Important
When it comes to remote work tax deductions, meticulous recordkeeping is critical. You need to prove that your home office is used exclusively for business. You also need to show that your travel to and from your client’s office or another employee’s location is related to your business. You also need to show that any remote workers you hire are regularly traveling on business. If you don’t have proper documentation, the IRS may disallow your remote work tax deductions.
Although it can be challenging, the effort is well worth it. Not only do you get to work from home, but you also get to deduct many of the associated costs. These remote work tax deductions can save you money on your taxes.