Working remotely comes with a lot of benefits. For one, you are able to manage your own time which in turn can give you a better balance between your personal and professional life. Another great benefit for many remote workers is the amount of money you can save by working from your home office.
Unfortunately, the Tax Cuts and Jobs Act (TCJA) of 2018 sets stricter guidelines for who can and cannot use the home office deduction, which has historically been a big deduction for people who work from home. As a result of these new rules, employees will no longer be able to use the deduction for office expenses.
Who can still take the home office deduction?
Now that the home office deduction has been limited to fewer people, you might want to know if it affects you. According to Forbes for tax years 2018 through 2025, you can no longer deduct your home office if you are an employee of a company.
This means, if you work for a company and are considered an employee, you will not be able to take the deduction, even if you work from home.
On the other hand, people who are self-employed and use their home office to meet with clients, grow their brand, or sell a product can still use the home deduction for 2018. If you have a separate structure built on or off your property, you can also continue using the deduction as long as the structure, studio, or workshop is your home office.
Is self-employment a smart move for employees?
Yes, for some employees it is smart to think about self-employment. For others, it might not be. The TCJA did rollout changes to the home office deduction and other changes that positively impact people who are self-employed.
However, if you work for a really great company that loads you up with benefits and gives you the freedom to work from home or go into work, you might not be ready or willing to leave. For you, the benefits of your job far out way the amount of money you might be able to save with the home office deduction and other tax changes.
The Motley Fool points out that it would be foolish to make this big of a decision solely on the home office deduction. There are too many variables to consider before deciding if self-employment is right for you.
There are still plenty of benefits to look forward to when working remotely
Assuming you’ve just realized you’re not able to take the home office deduction in 2018, we’ll try to end this article with some great news.
First, if you are working remotely, chances are you love it. You get to decide where you are going to work and who you surround yourself with. You also likely have a better work-life balance than most other professionals in your field.
Also, it is important to remember that even if you did lose the home office deduction for 2018, you still have plenty of other ways to save money while working remotely.