Can I get a tax deduction for working from home during covid?

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Hi, this is Linda Rogers from Planning Within Reach.

A common question that I am starting to get is - hey, I'm buying printer ink, and paper, and a standing desk - all of these expenses that I wouldn't buy if I wasn't working from home due to the covid crisis that we're all going through. Can I get a tax deduction for these items?

Unfortunately, if you're an employee, the answer is no. If you are self-employed, then yes. Here are the details.

The Tax Cuts and Jobs Act of 2017 eliminated the possibility of a deduction.

There used to be a way for employees to deduct unreimbursed work expenses on their tax return but that was suspended due to the Tax Cuts and Jobs Act of 2017. It's scheduled to come back in 2026 if there's no change, but it's not going to help you in 2020 with covid.

It was very limited even when it was in place. You had to itemize your deductions - you wouldn't get any benefit if you took the standard deduction. And you also had to have your miscellaneous itemized deductions be more than 2% of your adjusted gross income (your AGI). So again, it was very limited but even that is not available to you now if you are an employee.

Speak with your company about being reimbursed for work-related expenses.

All hope is not lost though. It's still worth reaching out to your company and just asking what their reimbursement policy is. There is a federal law in place that requires companies to reimburse their employees if their out-of-pocket expenses are driving them below the minimum wage and some states are going even further. California is an example of one that is requiring companies to reimburse employees for reasonable and necessary work-related expenses. How each company is going to define that, you need to check with them. So for example, if you are now using Zoom everyday for your work meetings, it's very likely that your company will reimburse you for that Zoom subscription. If you don't necessarily need a printer for your job, but you like printing things out and just looking at it with a hard copy before submitting it, they may not reimburse you for that if they don't deem it to be necessary. So reach out to them.

Self-employed individuals can continue to deduct work-related expenses.

If you have any questions just go ahead and keep your receipts and check with your tax person. But again, if you are self-employed and let's say you're filing a Schedule C at tax time, you can deduct your work-related expenses there just as you always have so there's no change.

We also do taxes at Planning Within Reach. So reach out with any questions and and let us know if we can help.

Linda Rogers, CFP®, EA, MSBA is the owner and founder of Planning Within Reach, LLC (PWR). Originally from New Jersey, Linda services clients throughout San Diego county and nationwide. She leads the design of PWR's investment portfolios which utilize broad, low-cost investments that integrate environmentally, socially, and governance (ESG) factors.

Planning Within Reach, LLC (PWR) is a fee-only and fiduciary wealth management firm offering one-time comprehensive financial planning, ongoing impact-focused investment management and tax preparation services in San Diego and nationwide. PWR is a woman-owned firm that specializes in busy professionals and impact investors. Planning Within Reach, LLC and their advisors do not receive commissions and do not hold any insurance licenses or brokerage relationships.

Prepare yourself for the "gig economy"

Many believe the "gig economy" is here to stay and will continue to get bigger. I heard a futurist speak at a conference a couple years ago, and he predicted there will be a "match.com" for employers and workers. Work will become more project-based with workers not necessarily being employees of a company but functioning as independent contractors. With Microsoft's recent purchase of LinkedIn, Microsoft may see LinkedIn as that matchmaking site. I will be asking our educational speaker next month for her thoughts, but I recommend professionals do the following: 1) Update your LinkedIn profile and clearly define your skills. Create a recurring task to review and update your profile quarterly.

2) Always be networking. Even if you love your job and have job security now, the future is unknown. I see many people who feel secure with their positions only to be let go due to a company sale, re-location, or structural change within their industry.

3) Reflect on what you are good at and enjoy doing. I just read the book, Spark Joy. The author is a decluttering guru from Japan, Marie Kondo. Her childhood stories are just as entertaining as the organization methods she developed and illustrated in the book. As a child, she would wake up early to organize her family's kitchen, and she practiced until she perfected a system for organizing every cabinet and drawer in her house. While she drove her family crazy at times, I am sure they couldn't deny she had a skill that she was very passionate about.

4) Create a vision of what you want to be doing in the next 5 years. Document everything you need to do to reach that goal. Break the action items into achievable goals for each of the next 5 years.

Linda Rogers, CFP®, EA, MSBA is the owner and founder of Planning Within Reach, LLC (PWR). Originally from New Jersey, Linda services clients throughout San Diego county and nationwide. She leads the design of PWR's investment portfolios which utilize broad, low-cost investments that integrate environmentally, socially, and governance (ESG) factors.

Planning Within Reach, LLC (PWR) is a fee-only and fiduciary wealth management firm offering one-time comprehensive financial planning, ongoing impact-focused investment management and tax preparation services in San Diego and nationwide. PWR is a woman-owned firm that specializes in busy professionals and impact investors. Planning Within Reach, LLC and their advisors do not receive commissions and do not hold any insurance licenses or brokerage relationships.