The pandemic led to a large number of professionals working from home instead of their office space. Many may be wondering how this will affect their taxes and if they’ll get a tax break.
The general thinking could be leaning towards you getting a break as an employee working from home, but that may not be the case. Tax breaks of the sort ended with the 2017 tax cuts with little exemptions. This means employees who don’t get reimbursed for their expenses by their employers can’t claim those expenses the way they used to. It’s more complex If you are self-employed and there are rules to be mindful of. You can still deduct a home office and some other expenses related to working from home, but want to ensure you are following the guidelines. It helps to speak with an accountant to get more clarity, but here is some helpful information:
What Can I Claim On My Taxes Working from Home?
You are not supposed to deduct your expenses when you work from home as an employee if your taxes, social security and medicare are deducted from your paycheck. Prior to the 2017 Tax Cuts and Jobs Act passed by the United States Congress, employees could deduct expenses like mileage, home office supplies, work outfits and more. The IRS now tends to qualify remote employee expenses of that manner as “miscellaneous itemized deductions” and since 2018 itemized deductions can only be taken if they exceed the standardized deductions.
Self employed professionals and business owners can still deduct for their office, meals, mileage supplies, marketing and more. Expenses you get in regards to working from home are tax deductible. It’s important to note that the expenses need to be exclusive to the business’s operations. A space used as an office by day and bedroom any other time would likely not be compliant. The space being used needs to be exclusively used for your business.
Tax Breaks Due to Covid-19?
There aren’t currently any special tax breaks for those working from home due to the pandemic. You can however count on a good accountant to ensure you get any tax breaks related to the pandemic if there are changes in the future.
In conclusion, the changes to the tax laws with regards to working from home may be confusing as time goes on. Having a professional assist you with your finances as an employee or business owner can make a difference. Accountant’s like us here at Motl Accounting are mostly aware of these changes and can help you get the most out of your taxes.
If you need to know more about what you can claim on your taxes, contact a professional at We’ve helped several individuals, families and businesses with getting the most they deserve out of their taxes.
Tax season is behind us, but that doesn’t mean it’s time to stop thinking about business expense documentation. In fact, now is the ideal time to get organized and create record-keeping habits that make sense for your company. Nobody wants to waste time digging through receipts and records just before tax day. Document your expenses now and you’ll save yourself and your accountant a headache later on.
Working with the Motl Accounting bookkeepers affords you the opportunity to not deal with all the effort and time it takes to stay organized with your expenses. We assist many businesses with bookkeeping services in Dundee, IL and the Chicagoland area. Below we share some of the things we recommend to our clients to keep their finances organized throughout the year.
Set up a Business Bank Account
One of the biggest mistakes people make when starting a small business is not creating a bank account dedicated to business funds. If you’re using the same account for personal and business spending, it’s easy to mix these expenses up and harder to locate specific purchases. Any business-related income should be pooled into a dedicated account. Only use business checking or credit cards when making purchases. Losing track of purchases will become a thing of the past. (more…)
If you’ve ever attempted a quick Google search for CPAs in your area, you’ve probably learned there’s no such thing as a quick search for an accountant. Accounting is all about the details, and when you’re trying to find someone to handle your finances, it pays to be thorough. Your money is at stake, and you should only choose someone who has your best interests in mind. A small amount of accountants have questionable (to say the least) practices, and knowing the warning signs makes a big difference:
Outdated CPA Certificate
There’s a reason many people prefer to work with a CPA rather than a general financial planner: the title requires a higher level of expertise. In addition to years of schooling, CPAs complete exams to ensure a high-level understanding of auditing, business concepts, financial rules and reporting. It’s worth checking out the Illinois CPA Society database to ensure your accountant has retained their license. (more…)
While the past decade has seen the advent of several tax preparation programs that allow users to file their taxes online, these programs raise several questions: Will filing your taxes online find you all of the deductions you qualify for? Are these programs secure? What if you encounter an issue? Here, we will examine the pros and cons of using tax software versus the advantages and disadvantages of filing with a CPA.
Depending on how complex your returns are, filing your taxes can take a fair amount of time. But, with that said, when you compare filing online with visiting an accountant, the time difference is clear. When you file online, you are still responsible for inputting all of the necessary information into the program. When you file with an accountant, they are responsible for wading through your information to complete the worksheets and calculations that result in your final return. This gives you the opportunity to spend your time doing what you want to do, rather than dealing with your taxes – which few people find enjoyable. (more…)
Cost accounting is a technique used to determine the best financial course of action. The primary purpose of cost accounting is to help decision-makers make decisions. By analyzing the cost of products, services, and projects, accountants can advise businesses of the best course of action regarding a particular transaction. To put it more simply, you calculate the elements of cost for product process (raw materials, labor, and expenses/overhead), compare that cost with the product price, determine the business’s revenue, and decide if and where savings are needed.
Cost accounting doesn’t have a singular approach. Cost accounting methods include: (more…)