Working Remotely ...Is This Tax Deductible?
Now that several of us have been quarantined for some time now, I wanted to take a moment to walk you through a day-in-the-life of many parents currently working and home schooling their kids during the pandemic. Many have recently asked what can be a tax deduction for their new “home office” or necessities for work and school. I am not one who enjoys bursting bubbles, however, as a parent we get better at delivering bad news. As a grandparent we enjoy reminiscing and watching history repeat itself – ten fold.
Tax reform made a lot of changes to the tax laws, and while high-profile moves, like reduced rates for corporate and individual income taxes, got a lot of attention, some of the smaller changes largely went unnoticed. One move that stayed under the radar was the elimination of the deduction for those employees who maintain a home office.
It has been a couple of years since the change, so let me help you out with a friendly reminder on what is not tax deductible under the current pandemic.
As a parent I can relate. As a grandparent, I breathe a sigh of relief.
Angels in Education
We have all been through those parent-teacher “conferences” where the parent in front of us was throwing a big tantrum about how this poor excuse of a teacher was giving their little angel a “D” for the semester (or worse!). This parent would rage on and on about how their little angel would never have issues like this and just what is this teacher doing wrong that their little angel could possibly have a grade this low or this type of behavior!
Flash forward – now the parent is having to “home” school their little angel and after three weeks, the parents are rioting to get out of the house and go back to work as they found out those little angels are exactly as the teacher said!
If you were wondering, your costs for “home” schooling your little angels are no more deductible than the expenses were while they were attending public schools.
Home-school cannot be run as a business nor even as a non-profit as you do not charge your own children for their education, and you provide no community service to others than your own family.
Dress For Success
You remember that nice computer you had setting on your “work” desk at home? The one that you used to browse the internet for things on sale to either wear to work or to the gym. You would scour the internet to see how cheap you could get it, then go to Amazon and make your order. Ah, good times.
Then came the “home” schooling and that computer was tied up for most the day with the kid’s homework or the teacher checking in to see how you were getting along with your little angel. The big grin on her face seems to be saying, “PAYBACK!”
By the time homework is done, dinner is cooked and dishes cleaned, you finally get your turn to work and it’s only 9:00 PM. Fingers on the keyboard, you are primed and ready to go only to discover your router is tired and your printer is out of ink. So, you browse the internet trying to find the lowest price – you find it, then you go to Amazon and order everything you need so you can start work.
Then, you start thinking, how about I order me the newest, latest, greatest computer, with those speedy chips in them. The kids could have the old one and I could work during a normal hour too. Good idea, and while I am at it I might as well order some new yoga pants for my new “business” attire. It is all work-related, right.
Well again, unless your employer wants to reimburse you for those work-related items that are clearly a necessity to your teleworking, they are not a tax-deductible expense.
Work clothes that can double as street or evening clothes are no more deductible than anything else in your closet. To claim a deduction for buying clothes, the clothes have to be mandatory for your job and unsuitable for everyday wear.
But hey, the yoga pants will come in handy while you take a work break and either log on and actually use your 10 minute work out app or your 30 minute easy workout to the beach body you always wanted. Either way, you have achieved the excuse to order the yoga pants along with your brand new computer, complete with ink.
In 2018, the deduction for unreimbursed business expenses were done away with, so what at one time would have been a deductible expense, is no longer.
Now, is it possible that Congress could bring this deduction back. In light of quarantine and teleworking, it could possibly happen but we have no way of knowing for sure. Let’s just say our crystal ball on tax law changes is a little cloudy at this time.
Jim has been a part of the firm for over 11 years and continues to impress us with his whit and humor. He has a special knack for helping non-accounting minds understand the tax language.
The best part of life, according to Jim, is being a grandpa and successfully raising his four children. He will say it sometimes felt like more than twenty, but only four that he had to claim and support. Having his daughter first, then the three boys is the best order to have kids because he had snitches and protectors for his daughter as she went through High School and the boys had a second mother to boss them around.