If you’re one of the millions of people who have started working from home due to the COVID-19 pandemic‚ you may be wondering what expenses you can claim for tax purposes. The good news is that there are many expenses you can claim for working from home‚ as long as you meet certain criteria. Here are some of the most common expenses you can claim for working from home:
Utilities
If you’re using more electricity‚ gas‚ or water at home due to your work‚ you may be able to claim a portion of your utility bills as a tax deduction. The best way to calculate this is to use the “actual expense method‚” which involves calculating the percentage of your home that you use for work. For example‚ if you have a home office that takes up 10% of your home‚ you can claim 10% of your utilities as a deduction.
Home Office Expenses
If you have a dedicated home office space‚ you may be able to claim expenses related to that space. This could include things like office furniture‚ computer equipment‚ and other supplies. You can claim these expenses as a tax deduction using the “actual expense method‚” which involves calculating the percentage of your home that your office takes up and claiming a percentage of the expenses based on that.
Internet and Phone Expenses
If you’re using your home internet or phone for work purposes‚ you may be able to claim a portion of those expenses as a tax deduction. Again‚ the best way to calculate this is to use the “actual expense method‚” which involves calculating the percentage of your internet and phone usage that is for work purposes.
Depreciation of Equipment
If you’re using equipment for work purposes‚ you may be able to claim depreciation as a tax deduction. This includes things like computers‚ printers‚ and other office equipment. To calculate depreciation‚ you’ll need to determine the useful life of the equipment and the percentage of its use that is for work purposes.
Insurance
If you have insurance on equipment you use for work purposes‚ you may be able to claim a portion of that insurance as a tax deduction. This could include things like computer insurance or insurance on other office equipment. Again‚ you’ll need to use the “actual expense method” to calculate the percentage of your insurance that is related to work.
Repairs and Maintenance
If you need to repair or maintain equipment you use for work purposes‚ you may be able to claim those expenses as a tax deduction. This could include things like fixing a computer or maintaining office equipment. As with other expenses‚ you’ll need to use the “actual expense method” to calculate the percentage of the repairs and maintenance that are related to work.
Other Expenses
There are other expenses you may be able to claim for working from home‚ depending on your specific circumstances. For example‚ if you need to buy a new chair or desk to accommodate your work‚ you may be able to claim those expenses as a tax deduction. You may also be able to claim expenses related to cleaning your home office or hiring someone to do it for you.
It’s important to note that you’ll need to keep good records of all your expenses in order to claim them on your tax return. This includes keeping receipts‚ invoices‚ and other documentation. You’ll also need to make sure that your expenses are reasonable and directly related to your work. In other words‚ you can’t claim expenses that are personal in nature or that don’t directly benefit your work.
In addition‚ you’ll need to meet certain criteria in order to claim expenses for working from home. For example‚ you’ll need to work from home for a significant portion of the year‚ typically more than 50%. You’ll also need to have a dedicated home office space that is used exclusively for work. If you don’t meet these criteria‚ you may not be able to claim expenses for working from home.
It’s also worth noting that there are some expenses you can’t claim for working from home. For example‚ you can’t claim the cost of commuting to and from your home office‚ since you’re not commuting to a traditional office. You also can’t claim expenses for meals or entertainment‚ even if you’re entertaining clients at home.
Overall‚ there are many expenses you can claim for working from home‚ as long as you meet certain criteria and keep good records. These expenses can help offset some of the additional costs of working from home‚ such as utilities and internet expenses. By claiming these expenses‚ you may be able to reduce your tax bill and save money on your taxes. However‚ it’s always a good idea to consult with a tax professional or review the guidelines provided by the IRS to ensure that you’re claiming the right expenses and following the rules.
