The ongoing coronavirus pandemic forced many Americans to change their daily routines and activities. As individuals attempted to social distance, one major shift occurred throughout the country for a large portion of its workforce. In an effort to slow the virus spread, many companies elected to have their employees work from home. Virtual meetings replaced gathering at the office as everything from church to school shifted online. These events forced a rapid adjustment to the new normal as dinner tables transformed into school desks, extra bedrooms morphed into offices, and enhanced internet connectivity became a priority.
These changes may also have an impact on your upcoming 2020 tax filings, but a thorough review of the parameters should be completed prior to opting in on any potential deduction. The biggest issue focuses on an allowed home office deduction as roughly 40-percent of Americans
completed paying jobs from inside their residence. However, just because you are performing work duties from the house doesnâ€™t necessarily translate into qualifying for the deduction.
Home Office Deduction
The home office deduction
accounts for certain expenses attributed to individuals who use their residence to conduct business. Both homeowners and renters can take the deduction, provided they meet the qualifying characteristics, but a few calculations must be completed. First, individuals must determine how much space is used for the home office. For many, this is simply the square footage of a room but in the event another area is used, the space should be measured appropriately versus that of the entire home. The deduction applies to the same percentage of mortgage interest, insurance, and potentially other items for that area.
Before you get too excited, know employees are not eligible for the deduction. Simply because it is safer for you to currently be conducting business for your job at home, doesnâ€™t necessarily qualify you for the deduction. This caveat likely disqualifies a majority of those who have been forced to transition into working from home versus showing up on the job site daily.Â
Those who may take the deduction are self-employed or freelance, contracted labor employees working on tasks from home. These individuals likely were taking the same deduction prior to the coronavirus outbreak, but any new business owners who are now using their home as a base for their businesses would also be eligible.
The bottom line is many employees who were forced to work from home during 2020 are likely not eligible for the deduction or expenses associated with their current working environment.
If youâ€™re ready to file a return or need help determining exactly which potential credits and deductions may apply to your given situation, then let the tax professionals at Bloch Rothman and Associates
assist you today. In addition to providing answers to your deduction or credit tax questions, they can also take care of multiple other issues dealing with paying or owing back taxes, required audits signaled by either the IRS or an outside agency, or any other personal or corporate wealth management issues. Along with providing a quality tax service, our group can also complete all types of returns or answer any other factors associated with financial issues or concerns you may have. Serving Denver and all of the surrounding areas for 35 years, our firm has an extensive history in helping clients with any and all of their tax issues or dealings with the Internal Revenue Service. If you have questions about your personal, business, estate, or any other filings, donâ€™t hesitate to contact us
today. Available for all of your tax needs, there are also a number of bookkeeping and payroll services offered to assist you and your business. We look forward to meeting you and providing the type of service you can rely on whatever your needs may be very soon!