For many professionals, working from home has been the reality since the start of the COVID-19 pandemic. And a slew of companies have signaled it could be the norm well into the future.
In fact, Global Workplace Analytics estimates that 25% to 30% of the workforce will be working from home multiple days a week by the end of 2021. They also note that 56% of American workers hold jobs that are compatible—at least partially—with a work-from-home situation.
If you fall into that category, you may wonder how you can save money when it comes to establishing a more permanent work-from-home space. Read on for our tips.
Claim Tax Deductions, If You Qualify
If you own a business or work as an independent contractor, you may already know that the IRS says you can deduct some home office expenses if you conduct business there “exclusively and regularly.” That means your family room doesn’t qualify as a home office if you run your business from the recliner, and your dining room can’t double as a home office. The second IRS requirement for your home office to become tax-deductible is that even if you collaborate and meet with others outside your home, you can’t manage and administer the business from any other “fixed location.”
If you meet those two qualifications, you can take the simple route for deducting home office expenses, which allows you to accept the IRS’s set offer of $5 per square foot of your designated office space (up to $1,500 max for a 300-square-foot space, for example). If you choose the more complex route of tallying actual expenses, you can claim full-cost deductions for home office-related repairs or maintenance, such as getting new carpet or fixing drafty windows. You also can claim a percentage of indirect expenses, such as your home mortgage interest, home insurance and your utility bills.
Add up all of those tax deductions with help from an accountant or by reading IRS Publication 587 and referring to IRS Form 8829, and then enjoy reducing your overall taxable income.
If you are employed by a company (and receive a W-2 tax form), you might wonder if you can get in on this great tax-reduction action. Unfortunately, you won’t qualify because the Tax Cuts and Jobs Act of 2017 eliminated miscellaneous itemized deductions—specifically like the home office deduction—through 2025. But there are other ways you can save, so keep reading!
Get the Best Deals on Equipment
Get the basics for your workspace or update your existing home office for less money by taking advantage of sales on Black Friday, Prime Day and Cyber Monday—and by doing your research. That way you’ll recognize a good deal when you see one.
Your list of “basics” could include an ergonomic chair (stop using the dining chair from downstairs); a functional desk space; computer and monitor (you may even need more than one!); internet routers; quality headphones (to drown out barking dogs or fussing kids); a printer, paper and costly ink; and even pens and pencils.
These costs add up quickly, so check with your employers to see if they provide loaner equipment. You can also get creative with cost-saving ideas you can find online, such as using a slab of wood as a desk instead of buying a pricy, traditional desk.
Negotiate Your Utilities
You can’t avoid internet fees and phone bills when working remotely, but often, you can find some wiggle room. Most internet providers will negotiate on monthly costs or offer discounted rates if you let them know you’re willing to get your service elsewhere. You also can lower costs by buying a router instead of renting one, bundling services or lowering your internet speed (if you can tolerate a slower pace).
When it comes to your phone, options for providers abound—so, there’s no need to settle. Even if you can’t claim your home office as tax-deductible, you may be able to deduct costs for technical gear the IRS deems “essential” for your work, such as a computer, internet service, your smartphone service and the like—or at least a portion of the cost. Look to your accountant or tax-prep service for guidance.
Ask Your Employer for Help
With so many new people working from home, lines may have blurred about which expenses are personal and which should be paid by your employer. That new rug and coffee maker are optional items you’ll have to purchase, but your employer may spring for some of the equipment necessary for you to work from home.
Some companies are allowing individuals to expense all phone and internet bills (so you won’t have to worry about haggling with the IRS over portions of those items when filing your tax returns), and others are even providing one-time stipends to help with home office set up, according to CNBC.
Some states, such as New York, Pennsylvania and Illinois, have laws that govern how companies reimburse workers for their business expenses. So wherever you live, it can’t hurt to inquire about your company’s policy on paying for work-related costs to see if you can reap a benefit.
Reallocate Funds
Working from home can save you cash. You can save the money you would normally spend on things like lunches with co-workers in the workplace cafeteria or dry cleaning and clothing costs. And without commuting, you can save on gas and car maintenance. Review unnecessary costs, like the satellite radio in your car, and then redirect the savings, along with any other line items in your household budget, toward your home office budget.
One study from FlexJobs, an online jobs hub that encourages flexible work situations, showed that Americans are saving as much as $4,000 annually working from home. Now, imagine how you could use that money to set up a perfect home office—and just think of all the toner for your printer that could buy!
Jennifer Chappell Smith lives with her husband in San Antonio, working as an editor and writer and mothering three boys, ages 11, 9 and 8.
Go above and beyond and create your dream home office with these tips