travel expenses deduction

Tax Time for Telecommuters


A few last-minute things to keep in mind

Though perhaps you are reading this in lieu of actually DOING your taxes, if you are a telecommuter these tips just might help. With the tax deadline looming, here are a few things to keep in mind and some deductions you may not know about:

1.  Home Office Deduction

2e0b5dd04e985fb995cce05092e64df2The IRS allows you to take deductions for your home office — whether you are a freelancer OR an employee.

You don’t necessarily need a dedicated room as long as you have a consistent, delineated area that is the SOLE place you do your work; it must not be used for any other purpose.

If your work requires you to go out and meet with clients, for example, and you spend much of your time out of the office, you can still claim a home office deduction as long as you perform administrative tasks there regularly.

In recent years, the IRS has allowed for a simplified home office deduction: $5 per square foot up to 300 square feet or $1,500. Otherwise, you must calculate what percentage of your home’s overall space is taken up by your office to determine your deduction. Office related expenses can also be deducted: office supplies, the relevant percentage of utilities such as phone, internet, and heating.

2.  Travel Expenses

Auto and public transportation expenses can both be deducted but only when traveling between one workplace and another–this does not include your typical commuting costs from home to work. It is important to keep meticulous records. However, if you haven’t been keeping track faithfully you can also take a percent deduction based on how much of your travel expenses are business related.




3.  The 2% Floor

Home office and other business expenses are only deductible if they are above 2% of your adjusted gross income. If your total business expenses add up to less than that you are ineligible for deductions. The IRS defines allowable deductions as things “ordinary and necessary,” such as dues to a professional organization  or relevant magazine subscriptions.



4. State-to-state Taxes

A telecommuter who is able to work from anywhere in today’s mobile workforce may be located in a different state from that in which the employer is based. This can make things unexpectedly tricky. A few states, among them New York, New Jersey, Delaware, Pennsylvania, and Nebraska, all have laws that tax earnings of nonresidents, and many other states seem to be leaning in that direction as well. So be aware that extra taxes may be required of you. While there are many boons to telecommuting, avoiding state taxes isn’t one of them!

While this may seem like an oxymoron–Happy Tax day! Or make it a happy tax week if you’d like to file for an extension. Either way, hope you don’t find it too taxing.

Please share your tax tips!