Working from home is one of the benefits of becoming a freelancer, doing contract work, or being self-employed. But when tax season comes around, the WFH life can cause some stress. After all, employers of remote workers typically do not withhold employment or payroll taxes from their wages. At the end of the tax year, this means that all the taxes that weren’t withheld must be paid back to the IRS — this is why self-employed contractors often receive a tax bill rather than a tax refund.
If that sounds like your situation, don’t get discouraged. Decreasing your taxable income with write-offs such as business expense deductions can help you reduce your tax bill. And you might even get a refund!
The Work-From-Home Wave
Due to advances in technology and global pressures (such as the coronavirus pandemic), more and more workers are going remote. Moreover, business closures and local restrictions forced many freelancers and entrepreneurs out of their usual coffee shops and coworking hangouts and back into their homes.
According to the Brookings Institution, in April 2020, about 50% of American workers were working from home — at least some of the time. That’s up from about 16% in 2019, the U.S. Bureau of Labor Statistics says.
In 2021 and beyond, working from home may remain a widespread practice due to its extensive benefits like increased job satisfaction, decreased carbon emissions, and location independence. However, working from home also comes with potential disadvantages. These include isolation from other people, numerous distractions (such as kids and chores), and lack of career development opportunities.
Common Tax Write-Offs for Remote Workers
Unfortunately, full-time employees who work from home can’t take any tax deductions if they buy work-related gear, such as a new desk or a new computer. However, their employers often can take such deductions.
But if you’re one of the millions of American freelancers, contract workers, and self-employed entrepreneurs who work from home — you may be eligible for several business-related tax deductions. These include:
- Office supplies
- Mileage or vehicle expenses
- Phone and internet service
- Business travel
- Health insurance premiums
- Business insurance
- Work-related education
- Credit card and loan interest for business purchases
- Home office expenses
Aside from business equipment, such as a computer, you can deduct purchases of home office items like a desk, chair, coffee table, or bookshelf.
The catch is that office furniture that’s eligible for a tax deduction must be used for your work. In other words, the leather reclining chair in your living room doesn’t qualify for a home office tax deduction. If you claim personal furniture as a business tax deduction, you could get in trouble with the IRS.
If you’re uncertain whether something you’ve purchased for your home qualifies as a business deduction, don’t guess. Instead, check with a tax professional. Whatever you end up buying, hang on to your receipts. That includes any receipts you get for purchases of home office furniture from CORT Furniture Outlet.
Save on Home Office Furniture
At CORT, we rent premium office furniture to businesses around the country. Once the rental period ends, remote workers like you can purchase professional-grade furnishings like ergonomic chairs, sit-to-stand desks, and sturdy bookshelves at clearance prices. Save with clearance home office furniture from your local CORT Furniture Outlet, and don’t forget to keep those receipts to track your WFH tax write-offs.