Here's who can claim home office tax deductions (Sorry, remote workers)
The number of people who work remotely increased as the pandemic took hold, and while some have returned to the office, others are still working at home. People have started businesses from home or new careers as they were laid off or resigned from their jobs.
Small business owners have to track many expenses, and among the highest are rental fees for office space. If you and your employees are working remotely, you can sublease that space or sell it if you’re an owner. Tap or click here for more tips on saving money for your small business.
You can deduct legitimate expenses from your taxes if you work from home. There are restrictions and rules, so the amount you can deduct will vary, or you may not be eligible at all. Read on to find out if you’re eligible.
Here’s the backstory
The instructions for IRS Form 8829 state that “you can deduct business expenses that apply to a part of your home only if that part is exclusively used on a regular
basis.” This includes conducting your business or trade in the space on your own or receiving clients, customers and patients there.
Two critical factors that contribute to your home office qualifying as your principal place of business are the importance of what you do there and the amount of time you spend there.
If you conduct administrative or managerial activities at another fixed location, it will lower your eligibility. For example, if you are spending most of your time at an office away from home doing billing, this could disqualify you. However, you can have an outside company do the billing from their location.
You can also deduct expenses related to the inventory you store in your home. If you sell electronics online and ship them from your home, that counts as inventory.
If you run a daycare center out of your home regularly, you may be able to deduct the business expenses. Do you have any children under the age of six? Tap or click here to see if you qualify for the child tax credit.
You don’t need to own the home where you conduct your business. There is space on the form to put down the amount you pay in rent.
No deduction for W-2
Here’s some bad news for most regular employees working remotely. CNBC recently reported on an exception for certain workers, as stated by the IRS in a September 2020 reminder: “Employees who receive a paycheck or a W-2 exclusively from an employer are not eligible for the deduction, even if they are currently working from home.”
Unsure if you’re eligible for the child tax credit? Use this quick check to find out
Even though the COVID-19 pandemic is slowly fading away in large parts of the country, millions of Americans are still financially struggling. The government has implemented several strategies to help those in need through stimulus checks and economic recovery plans.
The new, convincing tactic phone scammers are using to steal your money
As part of the recently passed COVID stimulus package, many Americans will receive early payments from the child tax credit. Those are scheduled to be mailed out by the IRS between July and December.
The first half of the child tax credit will be allocated during the scheduled 6 month period, and the rest will be completed when you file your taxes. But whenever money is being sent to citizens, criminals are gearing up to steal it.
More pandemic checks coming - Don't be fooled by bogus emails
With plenty of scams to go around, cybercriminals are tapping into news events to formulate new tactics. Just like the emails copying the events around the Colonial Pipeline ransomware attack, criminals are using the nationwide American Rescue Plan Act as bait, and thousands are being scammed.