Tax Deductions For Working From Home

Brett Walz

August 23, 2018

As tax return season is in full swing, we thought it would be timely to highlight an area of tax law which often causes confusion for people when having their tax returns prepared.

If you work from home, you may be able to claim a deduction for some of your expenses relating to using a home office.

A home office is regarded as a work area such as a study or spare room used for work activities.

Deductions that you may be able to claim for a home office include running costs, internet costs, use of a phone, computer or other electronic devices you are required to use for work purposes.

To claim a deduction for running costs such as electricity and depreciation of office furniture such as desks and chairs, you could claim a deduction for the work portion of the actual expense, or most people use the easier method to calculate which is claiming 45 cents per hour for time spent working in the home office.

If you want to use the 45 cents per hour method of claiming the home office, you should keep a diary record of the amount of time you use the home office for work purposes. The diary needs to be kept for a period of at least 4 weeks provided it would be representative of your home office use for the year.

As an example, if you are a teacher and your diary records show you spend over average 10 hours per week working in the home office and you spend 47 weeks per year working after taking off annual leave and public holidays, your deduction for running costs of the home office would be 10 hours x 47 weeks x 0.45 cents = $211.50.

There are expenses an employee can’t claim as a deduction for a home office including rent, rates, house insurance and loan interest.

Home office expenses are different to running a business from home. Our next blog will discuss tax deductions for running a business from home.

If you have any questions on home office expenses, our accountants are here to help.

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