What Counts as a Legitimate Tax-Deductible Remote Work Expense?
A new laptop. Printer toner. IRAs.
What could these three things possibly have in common? Well, if you’re working remotely and are self-employed, then these are items you can deduct when tax season comes around. Just because you’re not working out of a brick-and-mortar office doesn’t mean you don’t incur significant costs in other areas. So grab your ledger and jot down these helpful tips to get yourself prepared well ahead of the next tax season.
Here’s what counts as a legitimate tax-deductible remote work expense:
Did you buy a new laptop this year? Renew your subscription to QuickBooks? Up your annual contract with Adobe? Those are all deductible remote work expenses. So are other software upgrades, work-related SaaS subscriptions, website hosting fees, printer paper and toner, pens, binders, and half the office items available at your nearest Staples (including staples). Make a game out of it to see just how many things you’ve purchased that won’t require a payment to Uncle Sam. Be sure to keep all those digital and print receipts handy, and embrace the meticulous joys of itemization.
As a remote worker, you have the flexibility to call just about anywhere (with a solid Internet connection) your “office.” But when April rolls around, it pays to have four walls and a door you can close. In fact, your new desk, the matching chair with lumbar support, and even your stable internet connection are all tax deductible. It’s important to note here that this home office tax deduction only applies to self-employed remote workers, and it must be an identifiable space used as the principal place of business. With the 2017 tax overhaul, however, this tax break was revoked for folks who work as distributed employees working outside of a company’s office(s).
So you bought that new laptop, got yourself a nice desk, and upgraded your internet speed; you’re ready to take on yet another year of self-employment. During this time, you’ve likely accumulated transportation costs associated with client presentations or industry conferences; you’ve probably also incurred the cost of a latte or two when meeting with prospects or getting together with distributed teammates. Maybe you’ve invested in a coworking membership as an alternative to being at your place 24/7. You’re in luck: all of these costs are bona fide business expenses!
While you’re squirreling away income for the taxes you’re sure you’ll owe, don’t forget to pay into the other kinds of safety nets, like insurance and retirement plans. Again, just because you aren’t under a company roof doesn’t disqualify you from longevity planning—in health and in finance. In fact, being self-employed actually qualifies you for some specific kinds of plans in both regards. Check out the online health marketplace to see what subsidies you might qualify for, and talk to a financial advisor about opening an IRA, Solo 401(k), or SEP-IRA.
If you’re not keeping good records yet, now’s the time to start. Dive into the many tools available to you, such as Mint, Quicken, and QuickBooks (remember: tax-deductible!). And if you’ve been thinking about online advertising as a way to drum up some business to pad that shiny new IRA you’ve opened, that’s tax deductible, too. Tracking everything—from the gas in your house to the gas in your car—can feel daunting. Luckily, there are plenty of resources available to you, and if you find yourself in over your head, don’t be afraid to call in a professional.
Disclaimer: This article provides only general information about taxes and does not constitute legal or tax advice. You should not act or refrain from acting based on this article, or any related information on Remote.co, without first consulting with a legal or tax professional.
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By Kristi DePaul | September 17, 2018 | Categories: Work Remotely