Work For Yourself? Don’t Miss Out On Claiming This Tax Deduction | Global News Avenue

Many remote workers won’t be able to deduct home office expenses this tax season, but the self-employed still can.

2018, tax cuts and jobs act The ability to Remote workers can deduct home office expenses. However, freelancers who are entirely self-employed, have a side hustle, or whose primary place of work is at home can still claim expenses from their home office.

What can you claim?

Only home offices that are “ordinary and necessary” to the business can be used tax timesaid Crystal Stranger, registered agent and CEO of Optic Tax. Additionally, the area must be used “exclusively and regularly” for commercial purposes. This means it cannot double as a craft room or guest room, although individuals can place partitions to separate rooms.

Strangers suggest taking photos or finding blueprints of your home that show the space designated as a home office.

“In my experience, people typically get audited after two or three years,” Strange said. “When the IRS comes to question (you), if you’ve moved, you may no longer be able to verify that it was indeed an office space.”

Self-employed people can use the actual expense method to deduct overhead expenses that help maintain their home. However, self-employed individuals can only deduct a certain percentage of these overhead expenses, which is directly related to the ratio of the square footage of their office to the total square footage of the home. For example, if their home office takes up one-tenth of the home, they can deduct 10% of the mortgage payment and 10% of the electric bill.

Stephen Fishman, an attorney and author of “Home Business Tax Deduction,” said self-employed people can also deduct direct expenses, such as computer monitors or home office renovations. However, these expenses must be used entirely for the office (i.e. planting some shrubs outside may not be deductible), and the total expenses deducted cannot exceed the company’s profits.

There is also a simplified home office Deductions, self-employed individuals can deduct $5 per square foot of their office, up to $1,500. This typically results in a smaller deduction, Fishman said, but can be used if an individual wants the easier route and doesn’t purchase many home office add-ons that year.