Description:
I’ve been working fully remote (as an employee, not freelance) in the US for over a year now. Beyond the obvious stuff, what are some often overlooked tax deductions or eligible expenses that dedicated remote workers should be meticulously tracking throughout the year to potentially save money come tax season?
8 Answers
The situation is totally different if you're a freelancer or independent contractor (1099 worker). Then, you *can* deduct a portion of your home expenses (mortgage interest/rent, utilities, insurance) for the part of your home used exclusively and regularly for business. Plus office supplies, software, professional development, etc. But for W-2 remote employees, it's slim pickings for direct deductions related to remote work itself.
Yeah, what Stefan said is key. If you're a W-2 employee, specific deductions for home office expenses are generally gone federally. The main thing is if your employer *reimburses* you for home office expenses (internet, phone, supplies), that reimbursement is typically not taxable income to you, which is a benefit. But it's not a 'deduction' you claim.
Unfortunately, for W-2 employees working remotely, the home office deduction was suspended by the Tax Cuts and Jobs Act of 2017 and currently isn't available at the federal level. This is the biggest one people still ask about. State rules might differ, so check your specific state, but federally, it's a no-go for employees.
Focus on general deductions that everyone can take if they qualify, like contributions to a traditional IRA or HSA, student loan interest, etc. For remote work specific deductions as a W-2 employee, the landscape is currently barren at the federal level. Always consult a tax professional for advice specific to your situation, as laws can change.
While not a 'deduction' in the traditional sense, if your employer provides you with equipment (laptop, monitor, chair), that's a non-taxable benefit. If they provide a stipend for internet or phone, and it's under an accountable plan (meaning you substantiate expenses), it's also not income. These things save you money, even if not direct deductions you file.
One area to check is if your state offers any specific tax credits or deductions for remote workers, or if they have decoupled from the federal rules on the home office deduction for *state* income taxes. This is rare, but worth a look with a local tax pro. For example, some states had temporary provisions during the height of the pandemic.
Ask your employer for accountable-plan reimbursements for desk, chair, monitors, internet and phone use. Document training, certifications, software, business travel and check state rules
- Elizabeth Gonzalez: Also verify home office deduction eligibility for employees
- Avery Gomez: Thanks for adding that! The home office deduction can be tricky for employees since it’s generally only available if you’re self-employed or meet specific criteria. Definitely worth double-checking based on your work situation and state rules.
- Anonymous: Good tips! I’d add that some people forget about home office utilities like electricity and heating, which can be partially deductible. Also, keep track of any work-related subscriptions or memberships—they often get overlooked but can add up. Have you found any tricky rules with state taxes?
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