Do workers who are employees of a company but are working from home get to write off part of their home or apartment as a business expense, the way contractors and self-employed do?
The real bummer about this write-off is that it's binary based on the usage of the space - if you use it for _any_ non-business activities, you are unable to write it off. Compare to assets, where you write off the portion that you use for business. It makes it a fairly difficult writeoff to achieve for renters and people in small homes - who might be working out of their living room, kitchen, or bedroom most of the time.
Just a pet peeve of mine - it seems like it's well intentioned, but for many people who really could use it (people in small spaces starting their own business), it's not applicable. On the other hand, it can cut a nice chunk off of a big house's mortgage.
I say this as someone who has never been able to take advantage of the writeoff despite working from a small home for years.
Depends where you are (Coinbase hires in Canada now as well!).
Here you can write off the entirety of the space if it's used for business purposes, or a pro-rated amount if it's used for any non-business purposes.
Unfortunately, as soon as you step into "pro-rated" the value drops immensely.
If you have a 1000sqft house with a 100sqft office for which you pay $2,000/mo in rent, for a dedicated space you can write off `100sqft/1000sqft * $2,000/mo` = $200/mo = $2,400/yr
If you use that office for one hour once a week to join the video calls of your secret club or something, you can now only claim a fraction of the hours you used for work (160hours/mo) versus _total hours_ it exists (720hours/mo), not total hours you use the room. So the equation changes to `100sqft/1000sqft * 160h/720h * $2000/mo` = $44/mo = $528/yr
Since the denominator is the total hours available for use, not the total hours you use it you're no longer claiming any value for the time you're not using the room.
It's a little disappointing because I do have a spare room I could dedicate to an office, but I also have a nice desk with a nice chair and five monitors, speakers and mic set up for comfortable video calls, etc, etc. The extra tax refund would basically pay for me to re-buy a second copy of all this stuff after a year and I'd be saving money from there on out, but it's just so wasteful.
This year they offered a "simplified" deduction of just a flat $2/day up to $400/yr and so I didn't even bother with the paperwork for the detailed claim... this actually pays me more even though my rent is several thousand dollars a month.
In the US, I don't think you can write-off a space that's used for work, even if it's exclusive use, if you are a w2 employee. Please correct me if I'm wrong though, because I have a dedicated room for my office, and would be able to take advantage of this otherwise.
It depends, it was always a bit of a red flag in the US, but freelancers did and do so anyway. Based on the 2017? tax changes, employees basically can't period.
Depends on the country. In Germany you can. You need to have a separate room that is mainly used for that job. Eg Teachers, IT Professionals etc can benefit from it.
With the pandemic there is a flat amount everyone can deduct for 2020.
Just a pet peeve of mine - it seems like it's well intentioned, but for many people who really could use it (people in small spaces starting their own business), it's not applicable. On the other hand, it can cut a nice chunk off of a big house's mortgage.
I say this as someone who has never been able to take advantage of the writeoff despite working from a small home for years.