Tax deductions from working from home...

Suppose that I work at a company which allows me to work from home. I must, however, buy some IT infrastructure, among other things. Also, I must pay the utility bills, electricity, etc. to be able to work from home.

How much can I deduct for my taxes given this? Do I deduct my electricity, cable internet, hardware that I bought, and heat/cooling bills? All these things directly helped me in my work.

Deduct everything, put your dog down as a dependent too. See you in cell block 17.

Why are you asking in Usenet? See

Almost sounds like a Motel 6 advertisement: "... and we'll keep the toilet seat warm for ya."

It depends on your jurisdiction. You might be able to deduct a portion of your rent/mortgage, based on the percentage of your home that is devoted to the office space. It is much better if you have an actual separate room, that is solely devoted to work. Also, it is better to have a separate phone line, although you may be able to deduct a portion of your regular line.

If you are in the US, check the

However, note that, a home office deduction is a huge red flag in the scoring systems used to select people for audits. So it is vital to be very honest and by-the-book, with documentation, for these kinds of deductions. Just in case.

"Numbers Afficionado" wrote

As an employee you can deduct unreimbursed employee business expenses on Form 2106, which flows to Schedule A, which flows to your 1040.

There are limits however. Equipment purchased is depreciated over time (see Form 4562). Your home office expenses are limited to the % of the office in relation to the whole house. So if the "office" space is 10% of the house, you can only deduct 10% of the related household expenses. Publication 587 and 529 may be helpful as well.

All of this is (the ending total) is subject to a 2% floor of your AGI, in that the deductible total is that amount above the 2% floor.

And then, that amount, added with all other itemized deductions must be greater than your standard deduction to be of benefit.

I'd be talking to the boss about buying the hardware they require you to have, as well as some kind of reimbursable plan to compensate you for some of the home office expenses. The rest is the expense you incur for the benefit of working from home.

ynotssor wrote on 9/25/07 3:38 PM:

Because he used to ask stupid questions under the name "brablo" and people caught on.......

Get yourself incorporated, then charge your corporation rent for use of your working area plus utilities. Around $100,000 per year for rent and utils is not unreasonable.

At the end of the year your corp sends you a 1099 for the rent it had paid. You pay only income tax on the rent your corporation paid you. You do not pay FICA or Medicare and that will save you around 16% in taxes. Hopefully, you will use the tax savings to fund your corporate pension plan Many people here allege that putting social security taxes into a fund they control would make them more money than they could ever receive in benefits. Here's your chance to prove that.

Here in Ontario, Canada you may deduct a portion of your mortgage, car repair, gasoline, and utilities. That amount is proportionate to the business of course. You must keep record of gas used, mileage, etc.

It still allows for a decent writeoff and the end of the year :)