As from the 2018 tax year, there were changes made to the laws in the US relating to certain job-related expenses. Some of them are no longer deductible. Employees who work from home are growing in numbers and in many cases, there are some deductions they can still make. From a business point of view, it can be a cheaper option to have staff work from their own home rather than renting an office for them. Technology has made it possible for this to happen, so what things are there that they can still claim tax relief for?
If you have an office in your home that is regularly and exclusively used for business you should consider making a home office deduction. This can be a portion of home-related expenses, such as your mortgage interest, property taxes, insurances and utility bills.
This can be quite a complex area and it may be worth seeking advice from online tax filing services, to ensure that the correct forms are completed.
If you use your private vehicle for your work from home business you may be able to make a deduction for the business mileage you have traveled. You need to keep a strict record of the journeys and their purpose, in case the IRS wants more detail from you.
The same applies or any meals or accommodation you pay from your own pocket. However, if your employer reimburses you in full, there is no claim to make. If they partially reimburse you, the difference can be claimed as a deduction.
Keep Accurate Records
Your records of the deductions you want to make should be accurate and detailed. You should also keep any receipts or other proof of payment, such as credit card statements, that will support the claim.
The IRS suggests that you keep a daily log of your expenditure, and they do not mind if that is digital or hand-written.
Contractors and Self-Employed
Although contractors and the self-employed are not covered by the employment laws, they are able to make many of the same deductions. If you are in this category, you should retain as much information as you can about the income you have earned and the expenses you had to pay to be able to earn that money.
The forms you use will be different to the ones that employed people have to complete but will ask similar questions. Online tax filing services will be able to help you make sure that you get it right. You have to pay a small fee for the best ones, but it could end up saving your far more in time and money!
The US has a pay-as-you-go tax system, and as a self-employed person, you will have to make estimated payments on account of tax throughout the year. When working out how much you think you will owe, do not forget to allow for any deductions off your income. Paying your taxes in this way can prevent the problem of one huge tax bill at the end of the year.
Regardless of if you are employed or self-employed, none of us like paying more tax than we have to. It is up to you to make any deductions that you think you can, and up to the IRS whether they allow them.