The Coronavirus pandemic has proven to be the worst world health crisis of the century, but that is not the only crisis caused by the pandemic. The nations around the globe went under strict to partial lockdown depending on their respective covid-19 case count. But regardless of complete or partial lockdown, the economy has experienced a slowdown causing a great deal of financial stress on individuals, businesses, and nations alike.
One solution adopted by the majority to tackle this whole situation was work from home. Work from home allowed most of us to carry out our professional duties without risking our lives and our loved ones’. Despite all the efforts made, a majority of the population is left facing financial difficulties due to the economic slowdown. Resultantly, governments all over the world came forward to rescue their citizens in the form of financial incentives.
One such incentive is a tax relief, which proved to be a huge relief, especially for struggling individuals and small businesses.
Guide To Get Tax Relief In Manchester, NH While Working From Home:
If you are working from home and residing in Manchester, NH, here is a quick guide to educate you about tax incentives that you can benefit from.
- Home Office Deduction: If you are working from home and need to convert a portion of your house into your office and also procure office supplies and furniture etc. for this purpose, you may be entitled to deduct these expenses from tax. You may also be able to deduct these expenses from mortgage interest, homeowners’ insurance, property taxes, and some utilities. However, if your employer reimburses this amount to you, then this amount isn’t deductible.
- Travel and Meals expenses: Expenses incurred on personal vehicles used for business purposes like travel, or payment for meals during office hours, qualify for a tax deduction if you make these payments from your own pocket. Again, your employer will not reimburse these expenses as they will show on their books, and you may face even bigger problems than tax payments.
Limitation on Deduction:
Although this seems like a pretty awesome deal for work from home employees, you must need to learn about the type of expenses deductible under this option. Not all expenses incurred on home offices are deductible, which means you should not make unnecessary home office expenses. Secondly, the limit on the amount deductible from tax is 2 percent of the annual income of an employee. So if you earn $200,000 per year and spend $10,000 on a home office, only $6,000 is deductible from the tax, and the remaining $4,000, i.e., 2% of 200,000, is not deductible.
Independent Contractors and Self-Employed Individuals:
If you are an independent contractor and not an employee, don’t lose hope. Most of the deductions allowed for work from home employees are also allowed for self-employed contractors. However, we have a tip for you if you are an independent contractor. If your income exceeds $400, you must pay self-employment tax in addition to income tax.
So work from home may feel like an unusual and difficult to adopt routine, any financial burden that may come with it should not necessarily be paid by you. You must take care of your family’s health safety first and keep doing work from home until life becomes normal.
Get professional help by contacting UTS today!