SAN MATEO, Calif. (KGO) – If you are fortunate enough to work at home during the coronavirus pandemic, you may be wondering if you can get tax deductions for additional expenses. The answer depends on your circumstances.
Let's say your office is closed during the pandemic. So now you work at home.
You buy a desk, a chair, maybe even a computer. Are these additional costs deductible?
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What about the added utility costs such as heat, electricity, and water from spending more time at home? Is that deductible on your federal tax return?
The answer is no.
"Whether you can take them or not doesn't matter. There's nowhere to go to get them. So if you're an employee, you're out of luck," said Norm Golden, a tax expert and registered agent.
He says the 2017 tax reform measure signed by President Trump abolished detailed tax deductions.
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Now what happens when you send receipts to your company and get a refund? Around every third company does this.
Is the reimbursement taxable as wages?
You'll be happy to know the answer is no, too.
"It won't be on your W2 and you won't get a discount," he said.
But what if your employer gives you a monthly stipend of $ 100 per month to cover your expenses?
Unfortunately that answer is "yes".
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"Then yes, that $ 100 a month will be in your W-2," said Golden. That means you pay taxes on it.
There is some good news. Many of these deductions can be accounted for on your government income tax return – maybe even in your home office.
If your office is used for business purposes only and doesn't have a dual purpose, it can be deducted on your California tax return.
"Let's say you have a 1,000 square foot apartment and a 10 by 10 room? That's 100 square meters over 1,000, that's 10 percent. So you take 10 percent of your costs," explained Golden.
This is true whether you rent or own a home.
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However, if you work in your living room, that room is not deductible as it is not strictly an office and therefore it is also not deductible for your state taxes.
"I'm sorry. It might not be fair, but they don't use fair and tax law in the same sentence," he said.
Additional expenses, such as utilities, are only deductible from your state taxes if your home office is used solely as an office. If you are an independent contractor, these deductions are also available for your federal tax return.
Check out more stories and videos from Michael Finney and 7 On Your Side.
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