Work From Home: Is It Fiscally Smart?
Five years ago, the American public made it pretty clear what sort of workplace structure they liked: home. With the 2010 census reporting a 69% increase in ten years, it was a big shift in the demographic of the country to have so many people working out of their home. While it’s getting cheaper and cheaper to begin your own business or to telecommute efficiently, it does beg the question: it’s great, but is it fiscally responsible?
While farmers and artists have traditionally worked from home, and nowadays freelance writers, web designers, and virtual assistants as well, it’s become easier and easier to cash in while you’re still in pajamas. But the secrets to making it work for your bank account is not only possible, but it’s reflected in the policy as well, as long as you know where to look for it.
There are many practices in place that allow for the tax exemptions to work in your favor. The IRS recognizes these as applicable reasons to start claiming tax breaks on your income.
- Keep track of your business costs expenses.
The key here is to keep great records of what you’re spending, and can even apply to you if you aren’t working from home solely and head to meetings outside the house, or even if you have a traditional commute to work.
While the IRS is strict about the rules in these situations, as long as you have ample receipts and statements to prove your spending, it’s manageable. Things like new technology upgrades, from new MacBook Airs for your team or the SIP Trunking system you set up to increase efficiency, and even your cell phone bill if it’s primarily for business. There are limits to the exemptions so make sure you read up if you’re company is growing exponentially and you’re spending a lot in the same year.
- Take down your mileage and travel expenses.
When you travel in your own vehicle, take down the mileage you use for work, and if you aren’t reimbursed by your boss, you can take it off your taxes. Any meals, gas fill-ups, or lodging that happens for work counts so when you go to a convention on your dime, make sure you’re stockpiling those receipts because it can all add up.
- Consider the Home Office Deductions.
Home office deductions have a wide range of applicable cuts, with everything from using your home as space for storage, to actually seeing clients or patients in your space. It doesn’t have to be your principal place of business (but it certainly can) and all depends on what percentage of your home you are using to see a percentage cut in your taxes. If you’re an employee and not the boss, some additional rules may apply.
Are you interested in making the switch to at-home? Here are some great jobs to start the process, and it’s not all crunching numbers or being a slave to the game, which is great if you’re deciding to take a break to lower your stress levels or be there for your kids.