Working from home has become increasingly popular and with it has come the responsibility of managing expenses. As a remote worker, you are responsible for your own expenses and understanding what can be claimed as deductible expenses can be a confusing process. In this guide, we will explore the different types of expenses that can be claimed when working from home.
What Are Work-Related Expenses?
Work-related expenses are costs that are incurred while performing tasks related to your job. These expenses can be claimed as tax deductions, which can help reduce your taxable income. For remote workers, claiming expenses can be a tricky process, especially when it comes to claiming expenses related to home offices, equipment, and utilities.
Claiming Expenses for Your Home Office
With the rise of remote work, more and more people are setting up home offices. If you have a home office, you may be able to claim tax deductions for expenses related to your work. Before claiming these expenses, you need to meet the criteria set out by your country’s tax agency. In general, these criteria include having a dedicated workspace and using it solely for business purposes.
Expenses related to your home office can include rent, mortgage interest, real estate taxes, utilities, and repairs. However, it is important to note that you can only claim a portion of these expenses that can be attributed to your work use. For example, if your home office is 10% of your home’s total square footage, you can claim 10% of your rent, mortgage interest, and other home expenses as deductible expenses.
Equipment and Supplies
Equipment and supplies are essential for remote workers. These expenses include your computer, printer, fax machine, phone, and other office equipment. These items can be expensive, and it can be challenging to know what to claim as a business expense.
If you are using equipment or supplies for both personal and business purposes, you will need to determine the percentage of time that you use them for business purposes. You can then claim the percentage of the cost that relates to business usage.
For example, if you use your laptop for both work and personal use, you will need to determine the percentage of time you use it for work tasks. If you use it for work tasks 70% of the time and for personal tasks 30% of the time, you can claim 70% of the cost of the laptop as a business expense.
Utilities, such as electricity, heating, and water, are costs associated with running a home office. As remote workers tend to spend more time at home than traditional office workers, you can claim a portion of your utility expenses as a business expense.
To claim these expenses, you will need to determine the percentage of time that you use your home office for business purposes. You can then claim a portion of your utility expenses that relates to business use. For example, if you use your home office for business purposes 50% of the time, you can claim 50% of your utility expenses as a business expense.
Phone and Internet Usage
Phone and internet usage are two of the most significant expenses for remote workers. You may be able to claim a portion of your phone and internet expenses as a business expense. To do this, you will need to determine the percentage of time that you use your phone and internet for business purposes. You can then claim a portion of your phone and internet expenses that relates to business use.
For example, if you use your phone and internet for business purposes 80% of the time, you can claim 80% of your phone and internet expenses as a business expense.
Meals and Travel
Meals and travel are often part of a remote worker’s job. If you travel for business purposes, such as attending a conference or client meeting, you can claim expenses related to travel, including airfare, hotel costs, and meals. If you have to travel to different locations for work, you may be able to claim expenses related to a per diem allowance, which is a fixed daily amount given to cover food and lodging expenses.
When claiming meals as a business expense, you should keep in mind that there are limitations to what can be claimed. Generally, you can only claim a portion of the cost of meals if they were consumed while discussing business or if the meal was related to business travel.
Claiming expenses as a remote worker is an essential task to ensure that you don’t pay more tax than necessary. To claim expenses, you must keep accurate records of all your business-related expenses. Remember to keep receipts, invoices, and other documentation to support your claims. If you are unsure about what can be claimed, speak to a tax advisor who will be able to guide you through the process.
By following the guidelines in this guide, you can ensure that you claim all the appropriate expenses and save money on your taxes. While claiming expenses can be challenging, the potential cost savings make the effort worthwhile.