‘Working from home’ offers no tax benefits, but ‘maker economy’ drives home business boom: experts

Working from home may offer some conveniences, but don’t count tax relief among them.

The COVID-19 pandemic has changed the way Americans work, with many adopting a remote setup. Some companies have pushed for workers to return to the office, but many workers continue to work from home (WFH).

IRS ON HIRING BLITZ AS TAX BACKGROUND swells

But the distance does not come with any additional tax benefits, according to tax preparation companies.

A spokesperson for H&R Block told FOX Business that “taxpayers who work from home as employees will not be able to deduct any work-related expenses. The Tax Cuts and Jobs Act of 2017 has eliminated the deduction for unreimbursed employee expenses for tax years 2018 -2025.”

Instead, taxpayers who are self-employed “may qualify for the home office deduction and any other ordinary business expenses necessary for their business.” These deductions are based on setting aside an area “exclusively and regularly” for the business.

WILL THE INCREASE IN PETROL PRICES IMPACT THE RETURN TO WORK?

The one area remote employees need to pay attention to is any reimbursement received from their employer: Mark Steber, senior vice president and director of tax information at Jackson Hewitt, explained that the reimbursement may be considered taxable income, depending on the configuration of employer benefits.

“What I’ve seen over the past year, in the absence of tax relief…is a lot more talking and negotiating with your employer to say I’m working from home, I’ve incurred these costs and these new work-related expenses, how about some reimbursements,” Steber explained. “But these are really reimbursements for personal expenses, and unless you have an accounting business expense plan, it’s is taxable income.”

Businessman discussing work via video call with team members

“If you ask your boss for $5,000 for a desk or more monitors, and he gives you $5,000, that’s taxable income,” Steber added, calling it “facts and circumstances.” “Now there are rules for responsible plans…if you have a responsible plan where you submit receipts, and you get reimbursed for those receipts and certainly not just a wad of cash, you very well might not report this as taxable income.”

The WFH indie business landscape is booming thanks to what tax-prep firm Intuit calls the “creator economy” — an industry that includes everyone from Instagram influencers to Twitch streamers and even OnlyFans talent. .

HOW TO OFFSET COLLEGE COSTS WITH EDUCATION TAX CREDITS

A recent TurboTax survey found a 207% increase in the number of taxpayers claiming a creator, streamer, influencer, or related occupations from tax year 2018 to tax year 2020. Slightly more than the half of those people filed without a W-2, indicating that they rely on their creative profession as their main source of income.

“We’re just trying to educate these people because they’re making money and they’re self-employed,” Lisa Greene-Lewis, Intuit CPA and TurboTax blog writer, told FOX Business. “They don’t realize now that they’re making money, and on the other hand, they can deduct so much and such unique deductions, like their camera gear, all that stuff.”

Video Tiktok

Steber thinks the tax code will evolve to reflect the reality of the average American: If a large portion of workers stay away, the tax code could eventually reflect that.

GET FOX BUSINESS ON THE ROAD BY CLICKING HERE

“That’s how our tax code became complex and yet fair,” he said. “What the taxes reflected was the complicated nature of our society: buying a new house, getting new homebuyer credit; buying electric vehicles, they created a vehicle credit alternative fuel; work from home as a business, home office deduction.”

“It is certainly within the powers of our elected officials,” he added, noting that it is not in the current conversation.