Work From Home Financial Effects Overview:
- Who: Individuals who transitioned to remote work during the COVID-19 pandemic have a number of positive financial benefits, including tax deductions and business expense reimbursements from employers.
- Why: Labor laws allow individuals who work from home to benefit in addition to available tax deductions for those who are self-employed and conduct business out of a home office.
- Where: Many workers across the United States were forced to transition to remote work during the COVID-19 pandemic.
Working from home soared into the mainstream during the COVID-19 pandemic. What was once a niche lifestyle became not only a staple for many businesses across the United States but a requirement.
While many employers have brought workers back into the office, some continue to operate on a hybrid model while others have decided to make working from home a permanent change.
Being able to work from home has more benefits than working in pajama bottoms. It also can have a significant impact on your finances and end-of-the-year taxes.
Working from the house allows you to, among other things, make home-office related deductions on your tax returns.
Individuals who are self-employed and work out of a home office are eligible for a home office deduction, which can include everything from supplies, property taxes and utilities to home maintenance, among other things.
To qualify for the home office deduction, you must have a designated space in your home that you regularly use as your place of business, according to David Rae, a Forbes contributor and certified financial planner.
Rae says this space must be a place where you perform your official business, which could include conducting Zoom calls, meeting with clients or completing day-to-day work tasks.
There is also some flexibility with what counts as a home office with as much as a desk in the corner of a room counting so long as it resembles a workspace.
Individuals who work from home may also be able to deduct a number of work-related expenditures, such as electronics, gas mileage and other transportation and business-related costs.
Californians Who Work From Home Eligible For Compensation
Employees who work from home in California are also eligible for reimbursement on a number of business expenses by their employer based on labor laws in the state.
Expenses an employer could be responsible for under California labor law include a workers’ cell phone bill, gas mileage, electric bill or internet bill and the cost of creating and furnishing an aforementioned home office.
Being forced to work from home, meanwhile, provides additional protections for displaced California employees.
California workers who were forced into remote work during the COVID-19 pandemic should have expected to receive reimbursement for, among other things, home internet plans, electronic supplies, furniture, utilities, personal computers and teleconferencing software.
Workers who are not properly reimbursed or taken care of are able to file a lawsuit against their employer for state labor law violations per California’s Private Attorneys General Act (PAGA).
Did you transition to remote work anytime after March 2020? You may be eligible to join a free California work from home employee lawsuit investigation!
Don’t Miss Out!
Check out our list of Class Action Lawsuits and Class Action Settlements you may qualify to join!
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8 thoughts onHow Working From Home Impacts Your Finances, Especially Your Taxes
I live in Tennessee, but I work from home.
Poster, HSP is correct.
You can’t claim both, work from home expenses, and as an employee for the SAME job.
If you are an employee, directed to “work from home” rather than at an employer provided location, your employer should be paying all the extra expenses you have.
However, if you have two jobs, you can file separately for each of those two incomes. Such as, if you have valid income-producing self-employment and are also employed by someone else in another job.
Please add me
The way it was explained to me by my Tax Professional – Despite working from home, you must be set up as a sole proprietor, an LLC as a company with an income or receive 1099’s to be allowed the taxable write off. If you still work for an employer as stated above your employer should have allowed you to expense and be reimbursed for those expenses. The Employer should be paying for your wifi router or providing you an equipment expense for your computer, internet, and phone.
I am now a permanent work from home and was denied tax deductions by h&r block for my office expenses?? I have a second wifi router and service due to now working at home and had to create an office in the spare bedroom to work remotely.
Both of us were forced work from home but in Virginia.
My husband and I were forced to work from home and still do; however, we live in Virginia.
My husband and I both work from home. We are in Indiana