Tax Deductions for: Telecommuting Employees
The information provided in this brochure is an abbreviated
summary of the rules for the job-related expenses applicable to telecommuting employees.
For additional details as to specific business
expenses, the records required and the various governmental regulations, consult the firm providing this brochure.
In order to deduct expenses in your trade or business,
show that the expenses are “ordinary and necessary.” An
expense is one that is customary in your particular line
work. A necessary expense is one that is appropriate but not
essential in your business. The application of these
you relies heavily on the “facts and circumstances” of
Record separately from other supplies the costs of business
assets that are expected to last longer than one year and cost
more than $100. Normally, the costs of such assets are recovered
differently on your tax return than are other
recurring, everyday business expenses like business cards,
office supplies etc.
Desk & Chairs
The basic local telephone service costs of the first telephone
line provided in your residence are not deductible.
However, toll calls from that line are deductible if the calls are
business-related. The costs (basic fee and toll calls) of a
second line in your home are also deductible if the line is used
exclusively for business.
Deductions for: COMMUNICATION Expenses:
Second (Business Line)
PROFESSIONAL FEES & DUES:
Dues paid to professional societies related to your profession
are deductible. However, the cost of initial admission fees
paid for membership in certain organizations or social clubs
are considered capital expenses.
SUPPLIES & EXPENSES:
Generally, to be deductible, items must be ordinary and necessary
costs in your profession and not reimbursable by your employer.
Business Meals (enter 100% of expense)
Entertainment (enter 100% of
Legal & Professional Services
Educational expenses can now be used for a variety of
deductions and under certain circumstances qualify for tax
credits. Care must be exercised in keeping the various
expenses separated by type, since not all expenses are
allowed for certain deductions and credits.
Your auto expense is based on the number of qualified
business miles you drive. If you qualify for the home office
deduction, your home becomes your primary business location,
and you will not have any nondeductible commuting travel.
Therefore, generally all of your business travel from home to
other business locations and meetings will be deductible.
Document business miles in a record book as follows: (1) give
the date and business purpose of each trip; (2) note the place
to which you traveled; (3) record the number of
business miles; and (4) record your car’s odometer reading at
both the beginning and end of the tax year. Keep receipts for
all car operating expenses – gas, oil, repairs, insurance etc. –
and of any reimbursement you received for your expenses.
Continuing Education (miles)
Business Trips (miles)
Parking Fees ($)
HOME OFFICE DEDUCTION
A home office that is part of a residence is deductible only if
used regularly and exclusively as a principal place of business,
or as a place to meet or deal with customers or clients in the
ordinary course of business. Generally, telecommuting
employees would meet the “principal place of business” test,
i.e., the location where you spend the majority of your time
performing your work activities. Additionally, telecommuting
employees must meet the “convenience of the employer” test.
That test is met if your employer asks you to work out of
Total Square Feet of Home and Business Area of Home
Home Mortgage Interest
Expenses*: (Read instructions below) Direct Indirect
Repairs - Exterior
Utilities - Electric
related to your home office can either be direct or indirect expenses.
Direct expenses are those which can be directly allocated to your
business, such as a separate phone line or Internet connection
exclusively for your business. Indirect expenses are those that are
allocated to the entire house, such as electric, gas and water expenses.
Expenses accrued when traveling away from “home”
overnight on job-related and continuing education trips are
deductible. Your “home” is generally considered to be the
entire city or general area where your principal place of
employment is located. Out-of-town expenses include
transportation, meals, lodging, tips and miscellaneous items
like laundry, valet etc.
Document away-from-home expenses by noting the date,
destination and business purpose of your trip. Record
business miles if you drove to the out-of-town location. In
addition, keep a detailed record of your expenses – lodging,
public transportation, meals etc. Always list meals and
lodging separately in your records. Receipts must be retained
for each lodging expense. However, if any other business
expense is less than $75, a receipt is not necessary if you
record all of the information in a timely diary. You must keep
track of the full amount of meal and entertainment expenses,
even though only a portion of the amount may be deductible.
Bridge & Highway Tolls
Bus & Subway
Lodging (do not combine with meals)
(do not combine with lodging)
Telephone Calls (including home)