Filing An Online Tax Return
Filing An Online Tax Return Like A Pro With The Help Of Our Tips
To say that the Coronavirus has changed working routines for most of us, is the understatement of the year. And not in any one particular career field either. Some are still traveling to their work place wearing a mask, and many others work from home as remote workers. One thing for sure, filing an online tax return is going to surprise a lot of people.
There are quite a few Americans who were under the impression that because of being forced into remote working from home, would be able to deduct various expenses, like a home office.
Taxpayer questions about remote work from home
Before we get into the question and answer phase of this issue, let me assure you that the HBS Financial Group, and our online tax filing partner, 1040.com, is here to answer your questions. We’ll let you know what type of remote work that may qualify you for a tax deduction, and the work related items you can deduct.
Q. I’m an employee of my company and because of the Covid issue, my employer required me to work from my home. Can I deduct the expenses that I incur from working from home?
A. Short answer…no. Tax reform eliminated a lot of deductions a few years ago. On Schedule A, there was a miscellaneous deduction section at the bottom where work related unreimbursed employee expenses were deducted. That included auto expenses too, if you used your auto for your employer. Tax reform removed that section and all employee expense deductions with it. When filing an online tax return this must not be used.
Under the new law, only self employed individuals can claim these type of deductions that relate to working from home. There is one exception, however, performing artists, reservists, and certain fee based government officials may qualify for deducting unreimbursed business expenses.
A. Unfortunately, because of the new tax reform, an employee can’t use any work related expenses as a federal deduction. However, Alabama, Arkansas, California, Hawaii, Minnesota, New York and Pennsylvania will allow an employee who is a remote worker, to deduct those expenses on the state return. Hopefully, by the end of 2021, more states will join this group.
The HBS Financial Group will keep abreast of those states that follow that rule, and when you file your own tax return with us, we’ll keep you advised.
A. Yes, absolutely. An accountable plan is set up by employers to reimburse its employees for work related expenses, including auto mileage. The plan has to be set up following the IRS rules and regulations, and as long as it does, can reimburse its employees.
Q. If I’m self employed, working out of my home, what kind of expenses can I deduct?
A. First of all, you can deduct 100% of the cost of your business supplies, and other items that are used by the business to produce your income. Under the new depreciation rules, you can deduct 100% of the cost of equipment, furniture and fixtures, limited of course by the net income of your business.
In addition to the above costs, when filing an online tax return, you can claim the home office deduction too. Remember to make a calculation using both methods to see which one gives you the most benefit.
Q. I’ve heard about the home office deduction, how will it work for me?
A. The home office deduction can be a big benefit for a self employed person. It was eliminated for employees under tax reform but left intact for independent contractors. It allows you to deduct a certain portion of your rent or mortgage interest, real estate tax, homeowner’s insurance, utilities, and repairs & upkeep.
The portion you can deduct is based on the actual square footage of the space that is used regularly and exclusive for your business. As an example, say your office space is 300 square feet and your total house size is 3,000 square feet. The portion of expenses that you can deduct when filing an online tax return is 10%.
Instead of using the actual expense method, the IRS allows you to use the simplified method using a cost of $5 per square foot, up to a maximum office of 300 square feet, or a total deduction of $1,500.
Q. If I work from home as a self employed person, but don’t have a regular office, and have to use my kitchen table, can I still take a deduction for a home office?
A. When you’re filing your own tax return, you need to remember that you can’t qualify for the home office deduction if you don’t have a space that is used exclusively and regularly for your business. A table in your kitchen doesn’t meet the rules to take this deduction.
You could meet the rules if you have no room in your home. Say you convert your garage into your office and it’s used regularly and exclusively, then you’ll qualify.
A. Short answer is again…no. You’re still an employee of some school system and can’t deduct any expenses for a home office. However, as a teacher you can deduct up to $250 per year for any supplies you buy that are directly related to your profession, and aren’t reimbursed to you.
You can add a few more items to supplies for the teachers deduction. Under the Coronavirus Response and Relief Supplemental Appropriations Act of 2021, personal protection equipment such as masks, gloves, hand sanitizer, and sanitizing wipes are deductible. When you do your own income tax return, make a note to hang on to those receipts, and include the cost in the supplies category.
The HBS Financial Group has you covered when you’re filing your own taxes online. Based on your answers to our simple interview questions, we’ll know what credits and deductions you’re eligible for, and will make sure you get them.
Filing an online tax return doesn’t have to be hard, and with our system, it isn’t. What’s more, you can try it before buying, and see if our program is a good fit for you. Enter all of your information, and actually do a review and see your completed return. We think you’ll agree that our program is amazing. See for yourself.