Taxes when working from?

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gr7070
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Taxes when working from?

Post by gr7070 » Wed Mar 25, 2020 2:23 pm

Are there any tax benefits to be taken advantage of for working from home?

If so, what criteria must be met and documentation kept? Are there future consequences or actions that need to be considered?

Gill
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Location: Florida

Re: Taxes when working from?

Post by Gill » Wed Mar 25, 2020 2:40 pm

If you are an employee the deduction is no longer available.
Gill
Cost basis is redundant. One has a basis in an investment | One advises and gives advice | One should follow the principle of investing one's principal

Topic Author
gr7070
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Joined: Fri Oct 28, 2011 10:39 am

Re: Taxes when working from?

Post by gr7070 » Wed Mar 25, 2020 2:41 pm

Gill wrote:
Wed Mar 25, 2020 2:40 pm
If you are an employee the deduction is no longer available.
Gill
I am. Pretty simple then.

Thanks!

surfstar
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Re: Taxes when working from?

Post by surfstar » Wed Mar 25, 2020 2:43 pm

Be happy to not pay gas taxes, and your personal time commuting.
Increased home utilities (food/coffee too?) shouldn't surpass the time and cost of commuting, though. (for most people)

Don't forget your ergonomics and daily exercise though! Much more valuable than the small tax break that a part-time home office could have provided.

MathWizard
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Re: Taxes when working from?

Post by MathWizard » Wed Mar 25, 2020 2:45 pm

The following describes both requirements and record keeping.

https://www.irs.gov/pub/irs-pdf/p587.pdf

If you are thinking of the current circumstances, the Regular and Exclusive requirement would likely trip you up unless
this goes on for months.

If you use depreciation, that may have some implications when you sell your home.
I believe the percentage depreciation goes into how much of the sale value would
be deemed as income. I would check with a CPA if you are contemplating depreciation
on your home as part of a home office deduction.

In-home daycare has more lenient rules on the exclusive use (my guess is because this is a special case,
small amounts of money are involved for a business, and more people would just fly under the radar as a
cash only business, and the IRS would get no income taxes from the activity.)

MathWizard
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Re: Taxes when working from?

Post by MathWizard » Wed Mar 25, 2020 2:47 pm

Gill wrote:
Wed Mar 25, 2020 2:40 pm
If you are an employee the deduction is no longer available.
Gill
Do you have a reference for that?

I know that this has been severely restricted, but the IRS has a publication updated for 2019 returns.
Unless something has changed for the 2020 tax year, this would still apply.

If I am incorrect, I'd like to know with the conformation of references.

Spirit Rider
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Re: Taxes when working from?

Post by Spirit Rider » Wed Mar 25, 2020 3:04 pm

If you live in a state with no income tax, work in a state with an income tax. This should allow you to not be taxed by the latter. This should be true even in difficult states like NY that have a "convenience of the employer" rule.

This is certainly not a convience if you are working at home under a state shelter in place for non-essential personal order. Even if this is a choice of the employer, you would think the circumstances would also allow it.

Where it might get a little YMMV, is if this is voluntary on your part or due to loss of day care services. A lot of the 2020 tax ramifications to this and other circumstances are yet to be determined. For example, are employers willing and their payroll systems able to stop withholding taxes for such circumstances.

Before I retired I telecommuted several years for two different companies with headquarters in states with income taxes. They considered my work location to be in my state without income taxes and did no withholding. The state did not require any income taxes from me even though I probably spent 20% of my time at headquarters.

Gill
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Location: Florida

Re: Taxes when working from?

Post by Gill » Wed Mar 25, 2020 3:18 pm

MathWizard wrote:
Wed Mar 25, 2020 2:47 pm
Gill wrote:
Wed Mar 25, 2020 2:40 pm
If you are an employee the deduction is no longer available.
Gill
Do you have a reference for that?

I know that this has been severely restricted, but the IRS has a publication updated for 2019 returns.
Unless something has changed for the 2020 tax year, this would still apply.

If I am incorrect, I'd like to know with the conformation of references.
Unreimbursed employee business expenses were formerly miscellaneous deductions which are no longer deductible.
Gill
Cost basis is redundant. One has a basis in an investment | One advises and gives advice | One should follow the principle of investing one's principal

Spirit Rider
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Re: Taxes when working from?

Post by Spirit Rider » Wed Mar 25, 2020 3:21 pm

MathWizard wrote:
Wed Mar 25, 2020 2:47 pm
Gill wrote:
Wed Mar 25, 2020 2:40 pm
If you are an employee the deduction is no longer available.
Gill
Do you have a reference for that?

I know that this has been severely restricted, but the IRS has a publication updated for 2019 returns. Unless something has changed for the 2020 tax year, this would still apply.

If I am incorrect, I'd like to know with the conformation of references.
The home office deduction itself applies if working from home is a requirement of the employer. We would have to see if state mandates would apply. If you are voluntarily working from home the deduction would not apply.

Gill's main point is the exclusivity requirement. It would be a far higher burden to prove for a temporary situation and the likelihood of many people in the household. I have a friend whose company is having all employees work from home.

He is a Vice President and senior person at his location. For his sanity he is going into the empty office every day, because his wife, two college student sons and his daughter/husband are all working from home. There is no exclusivity with five other people all working from his home The latter are refugees from Baltimore. Their employers directed work from home and they evacuated three weeks ago to a very low incident region.

Gill
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Location: Florida

Re: Taxes when working from?

Post by Gill » Wed Mar 25, 2020 3:36 pm

Spirit Rider wrote:
Wed Mar 25, 2020 3:21 pm
Gill's main point is the exclusivity requirement.
No, home office expenses for an employee was a miscellaneous deduction. Those are no longer deductible along with investment advisory fees, safe deposit rental, tax preparation fees and the like.
Gill
Cost basis is redundant. One has a basis in an investment | One advises and gives advice | One should follow the principle of investing one's principal

Topic Author
gr7070
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Re: Taxes when working from?

Post by gr7070 » Wed Mar 25, 2020 3:46 pm

Some added facts.

Income tax-free state
Employer does require me to work from homev(Corona)
Employer is the state, fwtw

surfstar wrote:
Wed Mar 25, 2020 2:43 pm
Be happy to not pay gas taxes, and your personal time commuting.
Increased home utilities (food/coffee too?) shouldn't surpass the time and cost of commuting, though. (for most people)

Don't forget your ergonomics and daily exercise though! Much more valuable than the small tax break that a part-time home office could have provided.
Definitely appreciate all this; including stable, full-time, uninterrupted employment!

Walked and biked already today, too! Plus employer expects us to stretch and flex each day.

Figured if there was "free" and easy money (and legal) I'd take advantage of it, as well. Doesn't look like it's necessarily easy, and maybe not free; if even an option.

Gill
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Location: Florida

Re: Taxes when working from?

Post by Gill » Wed Mar 25, 2020 3:52 pm

gr7070 wrote:
Wed Mar 25, 2020 3:46 pm
Figured if there was "free" and easy money (and legal) I'd take advantage of it, as well. Doesn't look like it's necessarily easy, and maybe not free; if even an option.
It's not even an option. Enjoy your work at home.
Gill
Cost basis is redundant. One has a basis in an investment | One advises and gives advice | One should follow the principle of investing one's principal

Spirit Rider
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Joined: Fri Mar 02, 2007 2:39 pm

Re: Taxes when working from?

Post by Spirit Rider » Wed Mar 25, 2020 4:41 pm

Gill wrote:
Wed Mar 25, 2020 3:36 pm
Spirit Rider wrote:
Wed Mar 25, 2020 3:21 pm
Gill's main point is the exclusivity requirement.
No, home office expenses for an employee was a miscellaneous deduction. Those are no longer deductible along with investment advisory fees, safe deposit rental, tax preparation fees and the like.
Gill
Duh, I knew that (but temporarily spaced). As I am prone to do, I got self-distracted down the exclusivity rat hole.

Topic Author
gr7070
Posts: 679
Joined: Fri Oct 28, 2011 10:39 am

Re: Taxes when working from?

Post by gr7070 » Wed Mar 25, 2020 4:51 pm

I appreciate everyone's input. Thank you.

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