Hello,
I have worked from home throughout 2023. From January to August I worked from home as an employee of company. I was required to drive to appointments regularly and go into "the office" periodically. I was reimbursed for mileage. In April I accepted another job where I am working as a contractor. 100% of my work is done at home in my home office. I worked both jobs from April until August. I use a dedicated cell phone for calls related to work (not my personal cell). I also use my personal laptop to complete the work.
Could you give me some guidance on how to handle this situation in general, meaning:
*What items can be counted as deductions,
*How are deductions for utilities such as electricity and water calculated,
*How to calculate the deduction for each eligible item?
More specifically:
*Are there any deductions that can be taken based on the job that I worked as an employee working out of my home from January until August,
* Could you include any information that I may need to know but don't know enough about taxes to ask?
Thank you
AJ
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Hello @AYJohnson,
Working from home does have it's perks but lets make sure you have the tools to know when you can take deductions and what can qualify. With changes in the tax law, contractors can still tax deductions for expenses but employee cannot. Since you were both during 2023 it is important to keep track of your activity as a contractor separate.
When you work as an employee your are no longer allowed to take a deduction for unreimbursed employee expenses for any expenses you may have incurred as a result of that position. Only a few jobs in the armed forces reservist, performing artist and a few other special groups of employees can still take a deduction. Here an article for you to reference and find more details: Unreimbursed Employee Expenses
As a contractor you are allowed to deduct expenses that are reasonable and necessary for your line of work. So if you are a contractor, you may need to buy a hammer and nails and a contractors license, etc. So it depends on your line of work. If you have an area of your home that is used exclusively for work then it may be deductible under the Home Office Deduction. The deduction for the space and other home expenses, like utilities, etc. are based on the percent of spaced used of your total home. Here is a great article for expenses you may be able to deduct as a self-employed person: Self Employed Deductions
The great news is Turbo Tax will provide a list of common expenses based up the type of work you do and will also guide you through each section and do the calculations for home office, etc.
Wishing you all the best with please reach out with additional questions.
Sorry---W-2 employees cannot deduct job-related expenses on a federal return. Job-related expenses were eliminated as a federal deduction for W-2 employees by the tax laws that changed for 2018 and beyond. Your state tax laws might be different in AL, AR, CA, HI, MN, NY or PA.
If you live in a state that lets you deduct job-related expenses, the information will flow from your federal return to the state return, so enter it in Federal>Deductions and Credits>Employment Expenses>Job-Related Expenses
You will need to use online Self-Employed software or any version of the CD/download so that you can prepare a Schedule C for your business expenses.
You will be paying self-employment tax for the work done as an independent contractor, and you can prepare a Schedule C for ONLY the business expenses incurred as an independent contractor.
https://ttlc.intuit.com/questions/2926899-how-does-my-side-job-affect-my-taxes
https://ttlc.intuit.com/community/self-employed/help/what-is-the-self-employment-tax/00/25922
https://ttlc.intuit.com/questions/2902389-why-am-i-paying-self-employment-tax
https://ttlc.intuit.com/questions/1901340-where-do-i-enter-schedule-c
https://ttlc.intuit.com/questions/3398950-what-self-employed-expenses-can-i-deduct
https://ttlc.intuit.com/questions/1901110-do-i-need-to-make-estimated-tax-payments-to-the-irs
https://turbotax.intuit.com/tax-tools/calculators/self-employed/
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