Working from Home Now? How to Ensure That Your Tax Deductions Are Correct

Thousands of people have started to work from home in recent times due to the effects of the pandemic. For many, this is the first time that they have ever done so, and it does take some time to get accustomed. As this is likely to be a long-term shift, and this new pattern may continue all the way through tax time, how do you account for deductions when completing the paperwork?

Your Responsibility

If you were used to working in a downtown office then, ordinarily, you wouldn't need to worry about the tax implications. Your employer would take care of their own paperwork and would deduct the costs related to providing the work environment.

Now, you may be eligible to claim instead and will want to know how to proceed. Fundamentally, you can only claim expenses if they are directly related to the way that you earn your salary or wage, and you have to spend the money yourself (more of that in a moment). Most importantly of all, you need to keep accurate records so that you can prove your case as needed.

Examples

Sometimes, you may need to use your home phone to make calls that are related to work. In this case, keep an accurate record and allocate part of your utility bill as an expenditure. Likewise, you can apportion some of your monthly broadband bill, but only insofar as it relates to your dedicated work computer. In both of these cases, you will have spent the money and are therefore perfectly entitled to claim it. Conversely, if your employer provided you with a separate mobile phone and asked you to conduct all of your work calls on that device, then you cannot claim. The employer is paying the bill, both for the phone and the calls and they will claim that expenditure against their own tax bill.

Claiming for Space

You need to get dedicated space at home and make sure that you only use it for work purposes. You can then divide the size of that room by the total size of the home and can claim back some money for your share of the utility bills. Generally, you may also be able to claim a portion of your mortgage or rent in relation to, once again, the size of your workspace.

Keeping Records

Always make sure that you keep accurate records to justify the expenditure and your reasons for including the amount as a tax deduction. If the tax authority asks any questions, you will need to provide the documentation.

Getting Advice

Ask for advice from a tax accountant if you're not sure. They'll help you to get it right and avoid any problems in the future.

Reach out to a tax accountant for more information.