Many Americans are starting to work from home. Between 2019 and 2021, the number of people primarily working fro tripled from 5.7% to 17.9%. Even abroad, Americans are exploring options of flexible work. Perhaps you are one of these Americans. Fortunately, if you are an expat that is self employed or not, there are certain deductions available to help reduce taxes if you are working from home.
Qualifications
To qualify, it is quite simple. First, you have to be using part of your home or apartment for business purposes. Now, according to the IRS, you must meet the following two criteria:
- Regular and Exclusive Use – a certain area of your home must be exclusively used for business
- Principal Place of Your Business – The primary place where business is conducted must be your home or apartment.
You may also qualify for home-office deductions if you are not a small business owner but are an employee working from your home.
Deductions Off of Deductions
There are two types of expenses that can deducted from your US taxes. Expenses are categorized based on direct, indirect or unrelated expenses. Direct expenses include expenses used for your business. Typically these expenses can be deducted in full. Indirect expenses are expenses that are used to maintain your home, such as utilities and general repairs. The deduction is based on the percentage of your home that is used for business.
Some other indirect expenses that can count towards deductions are:
- Mortgage interest
- Real estate taxes
- Mortgage insurance premium
- Casualty losses
- Other expenses (utilities, depreciation, repairs)
Further, you can look on the IRS website for Publication 587 for a complete overview of deductible expenses.
Another thing to note is that you will need to file Form 1040 based on whether you are self-employed or an employee.
Get Help Today!
At Americas Tax Firm we are dedicated towards helping you in your tax situation. Seek help today from a licensed professional to guide you through your next tax return so you don’t have to worry.