Are you a self-employed freelancer working from home? With the recent tax changes in 2023, one thing to note is that the work-from-home benefit has been removed. But don’t worry! We’re here to help you make the most out of your home office deductions. 🌟
Home Office Deductions 🏠
You’re eligible to claim expenses for using a part of your home as a workspace for your business, as long as you meet one of these conditions:
- It serves as your main place of business
- You only use this space to earn income for your business, and you use it regularly to meet with clients or customers
What Can I Deduct? 💸
If your home office meets the criteria for a tax deduction, you can claim a portion of your household expenses. This includes your utilities, home insurance, property taxes, and mortgage interest.
You can also deduct the cost of supplies related to your home office such as cleaning supplies, pens, pencils, paper clips, and other stationery.
How Much Can I Deduct? 📊
The amount you can deduct is based on the percentage of space you use or how long you spend working in a multi-purpose area.
If you’ve got a space at home that’s purely for your business:
- Work out how much of your home it takes up
- For example, if your office is 10% of your home’s size, you can deduct 10% of your expenses
If you use part of your home for both work and personal stuff:
- Figure out how many hours you spend working there using this formula: (Hours used for business / 24 hours) x Business portion of total home expenses
- So, if you work 6 hours a day in your home office, and your office space accounts for 10% of your total home’s expenses, the formula would look like this: (6 hours / 24 hours) x 10%
- If you only work part-time during the week or year, adjust your deduction to match
Common Mistakes to Avoid ❌
- Claiming repairs for other parts of the home
- Claiming full mortgage payments
- Rounding up your expenses
Feeling like this is a lot to remember? 🙃
That’s literally why we made Sai. Because we know you don’t have time for this!
Sai will:
- Track + categorize all your expenses
- Give you estimates of how much tax you owe each month, so you can put that money away and NOT spend it lol
- File your taxes at the end of the year!
