This Washington Post headline is pretty clear: “Are you a telecommuter with a home office? You just lost a tax break.”
“It’s part of a larger transformation in the federal tax code that removes employees’ ability to deduct business expenses that their employers do not cover.”
The Post offers guidance for telecommuters who will find they will not be able to take a significant tax break related to home office expenses when filing taxes next year. (Please note that this change is for remote workers and not for the self-employed or business owners who have offices in their homes.)
An accountant interviewed for the article likened the costs that a telecommuter might spend to maintain an office to a paycut but with the new tax reform those employees won’t get a break on their taxes for this “paycut.”
The Washington Post suggested that people in this situation:
- Ask for more compensation, either through a raise or a bonus.
- Look for ways to get your employer to cover these expenses, via an ‘accountable plan,’ paying you rent for the use of your home office, or asking for less pay in exchange for having these expenses covered.
- Consider becoming a contractor if you find that it will work to your benefit financially. You won’t have employee status or benefits but you can take certain deductions as a contractor that you cannot take as an employee.
If you will lose this tax break in the coming year, a Fee-Only financial planner can assist you in doing the analysis necessary to figure out what next steps you might take. One telecommuter interviewed for the article realized that he would need more compensation to maintain his home office and found a new job that offered what he needed.
For those who are not in they situation, you could still benefit from examining how the recent tax reform may affect your overall financial outlook before next April and a financial planner can help.