WFH collage created by the author using PowerPoint Designs
Yesterday, I wrote about Proven Methods to Make Money from Home in Bangor, Maine. Today, I want to tell you how to save money on taxes by doing that, whether full-time or as a part-time “side hustle.”
Whether you have a goal of making an extra $500 a month to help with the mortgage, $4,000 per month to pay college tuition for two kids, or just growing enough organic vegetables in your home garden to save money at the supermarket, you need to read this article today.
This is crucial tax filing information for Old Town, Orono, and Bangor, Maine work-from-home (WFH) employees such as writers and others are discovering. They cannot deduct their home office expenses on their taxes if employed by someone who can write off their empty office space.
NOTE: Before you decide to start a WFH business or deduct home office expenses, consult a tax lawyer or tax accountant. If you don't have one, Google where to find a tax accountant in Bangor, Maine.
Chart: WFH Study
WFH and gig economy are two terms that sprung up last year to describe the new condition for many employees who do at home what formerly did in the office or factory. According to Merriam-Webster, “The gig economy gets its name from each piece of work being akin to an individual 'gig’ or project.”
The difference for most is that WFH entails doing the same thing they did at the office at home. However, the gig economy usually applies to self-employed workers who are contracted per project or gig.
Photo by Andrew Neel on Unsplash
How This Became a Conundrum
According to the Washington Post, “Trump’s 2017 tax overhaul killed off the deduction for an employee’s home office.” President Trump made it illegal to claim a deduction for your home office if you were employed by someone else whether or not they provided a WFH stipend for your office.
In 2020, due to the pandemic, millions of workers went from the office to full-time WFH employees without an additional benefit to pay for Zoom subscriptions, printer & ink, internet connection, pens, staplers, and more.
However, self-employed personnel can deduct 100% of their home office expenses and a portion of their mortgage or rent. Start a business, and write it off next year.
What’s more, if you are working for a firm in Massachusetts (MA) and living in ME or New Hampshire (NH), you might be paying State Income Tax to Massachusetts instead of no income tax in NH, or a smaller income tax where you live and now WFH in Bangor, ME.
NOTE: There is a current lawsuit ongoing where NH is suing MA over state income tax claims.
Graph: WFH accounts for 60% of US economy Source
The Current Benefits of WFH in a Gig Economy
Even without the tax incentive provided for employees who WFH, there are other benefits. Although you should still get up at the same time, shower, and get dressed as if you were going to work at the office, it isn’t necessary unless you have a Zoom meeting.
By all means, put on some pants for those Zoom meetings, right Jeffrey Toobin? He was suspended for exposing himself during a Zoom Meeting. Additionally, you should check to ensure your kids, secretary, or spouse hasn’t turned on a filter if you have Zoom Court. Unless, of course, you want to go viral, get interviewed by NBC News, USA Today, The Good Morning, America show, and others.
What shocked most was that he chose to clarify, “I’m not a cat,” and despite not knowing how to turn the filter off, he decided to go on with the litigation.
Related articles by the author you might also enjoy:
The Washington Post article, Millions of employees won’t get a tax break for working from home during pandemic. Companies with empty offices do.
The USA Today article, During Zoom calls, keep your pants on: It’s not prudishness, it’s white male privilege.
The Chicago Tribune article, Working remotely from a home office? You just lost a tax break.