Robert J. Fedor, Esq., L.L.C.

Tax deductions often not among perks of telecommuting

In years past, American workers were required to physically be at an office at least eight hours per work day. Today, technology has enabled many workers to work from anywhere and a growing number are choosing to work from home and telecommute. Along with the perks of having no commute and being able to work in your pajamas, working from home does have some drawbacks and can even potentially result in tax problems.

Many companies and employees around the country are realizing the benefits of telecommuting. For employers, the cost-savings related to office space and supplies can be tremendous. For employees, the flexibility that often comes with telecommuting provides for a better work and life balance. Along with these benefits, are also assumed tax breaks related to a home office and work supplies.

In recent years, many small business owners have taken advantage of tax deductions related to having a home office. The process of figuring out these deductions and filing the appropriate tax forms, however, was historically complex and arduous.

Last year, the IRS introduced a new method for figuring out deductions associated with a home office. Deemed the Safe Harbor method, small business owners are now able to more easily and quickly determine appropriate IRS deductions. The same rules do not, however, apply for telecommuters.

In fact, the majority of telecommuters do not qualify for any tax deductions. Telecommuters are only potentially eligible for some tax deductions if working from home serves to benefit their employer. In other words, it cannot be an employee's idea to work from home. Also, if an employee's company provides supplies like a computer and telephone, these items are not tax-deductible.

Small business owners and telecommuters who have questions related to tax deductions would be wise to discuss their situation with a tax professional. Employees who take deductions without checking IRS rules may be subject to fines and potentially face charges related to tax crimes.

Source: Forbes, "Does The IRS' New Safe Harbor Rules Help Or Hurt Remote Workers?"  Priyanka Sharma, June 13, 2013