How Work From Home Culture Could Change Your Taxes
Start writing a post
Adulting

How Work From Home Culture Could Change Your Taxes

The job field for recent college graduates looks much different, and it could affect your taxes.

372
How Work From Home Culture Could Change Your Taxes

The job field for recent college graduates looks much different today than it did even 10 years ago. You might have big dreams about working from home because so many positions have become remote. There are plenty of perks to working remotely, but people are often surprised by how it affects their taxes.

This guide explains how work from home culture could change your taxes and how to make a smooth transition once you receive an offer of employment.

1. You Could Earn New Deductions

The most significant benefit of work from home culture is the addition of deductions. Every time you have to buy printer paper for work projects, upgrade your laptop to do your job, or even buy gas to drive for interviews, they can all reduce your total tax bill for the year.

Most things you buy for your job will count as a deduction, including portions of your rent, mortgage, and electricity bill. Calculate how much of your rent or mortgage covers the square footage of your home office and how many work hours each week require electricity. Those calculations will also reduce your tax bill, which can save a significant amount of money for remote employees and contractors.

2. You Might Pay Double Taxation

Tax laws can get complicated and cost people more money than they actually owe. Remote workers in New York pay two income taxes on whatever money they make, both in and out of the state. If you work for companies based in New York and a different state, you might pay double the income taxes.

Although the Supreme Court created a Common Clause tariff in the 2015 case of Maryland v. Wynne, accidents happen during tax filing season. If you've found that you paid double income taxes, you'll have to take the case to court. You'll most likely win your case because of the Supreme Court's ruling, so carefully review your tax filing each year.

Learning about important laws like this is one example of how work from home culture could change your taxes and how you handle them.

3. You Should Save Receipts

Although some accountants take their clients' word when adding deductions, most will require proof of each expense with receipts. Save receipts for everything from gas purchases to office supplies. You'll have to keep a spreadsheet record with the totals and dates of purchase, along with physical and digital copies of each receipt.

4. You'll Pay Self-Employment Tax

If your job qualifies as a contractor position, you'll pay the self-employment tax. This tax covers the portion of Social Security and Medicare taxes that your employer would cover if you worked under a W-2. Instead, you'll have to pay the 15.3% rate in addition to your state and federal income taxes.

It takes a significant chunk out of your paycheck, so it's wise to meet with a financial advisor or accountant to determine how much to set aside for this tax each year.

5. You Should Pay Quarterly Estimated Taxes

Employees who get a W-2 don't have to pay quarterly taxes because they receive each paycheck after their employer pays the applicable taxes with their income. Work from home culture gets much easier if you pay quarterly estimates.

Each quarterly payment will depend on your total income. Based on your meeting with an accountant or advisor, you'll pay state and federal estimated taxes four times each year. When the April annual tax filing deadline rolls around, you won't have a big bill because you already kept up with what you owed throughout the past year.

Expect a Change in Your Taxes

While studying for finals and applying for your first post-college job, make sure you learn how work from home culture could change your taxes.

It's better to prepare yourself for things like the self-employment tax, quarterly payments, and any situations where you might overpay and get your money back through a court ruling. You'll enjoy the freedom of remote work more if you don't have to worry about your new tax situation.

Report this Content
This article has not been reviewed by Odyssey HQ and solely reflects the ideas and opinions of the creator.
Featured

'Hotel Transylvania: Transformania' Film Review

Solid animation can't raise the newest entry in Sony's colorful monster series beyond the basics

34435
'Hotel Transylvania: Transformania' Film Review
Photo Credit: Amazon Prime Video – YouTube https://www.youtube.com/watch?v=6suJohjIvfo

I take a slight issue with the idea that Adam Sandler didn’t have a good dramatic role until ‘Uncut Gems,’ what about ‘Hotel Transylvania’ (he says semi-seriously)?’

Keep Reading... Show less
Featured

4 Common Reasons Couples Get Divorced

Are some people just not meant to be together? Is there any way to prevent an impending divorce?

70690
4 Common Reasons Couples Get Divorced

We've all heard the statistics. Roughly 50% of married couples eventually end up divorced. This can lead to complications, problems with your children, financial issues, and no small amount of negative emotions.

Keep Reading... Show less
Featured

​Pets are Good for the Soul

Millions of Americans have found comfort in pet ownership. The media has been awash with stories about a surge in pet ownership, as Americans have taken advantage of the ability of pets to improve emotional well-being.

71204
Good for the Soul
Pets are Good for the Soul

America is going through a mental health crisis. This crisis predates the global pandemic, but has in many ways been dramatically exacerbated by it. In 2019, 19.86% of adults, or 50 million Americans, reported suffering from a mental illness. The emotional toll of the pandemic has been heavy, with over half of U.S. adults saying that they have experienced stress and worry related to Covid-19. Anxieties over work, uncertainty about the future and other triggers have intensified the mental health crisis. Millions of Americans have found comfort in pet ownership. The media has been awash with stories about a surge in pet ownership, as Americans have taken advantage of the ability of pets to improve emotional well-being.

Keep Reading... Show less
Featured

How Your Sleep Position Affects Your Health?

You changed into your pajamas, turn off the lights, and get yourself ready to sleep. How do you prefer to sleep, on the back, on your side, or on your tummy? Although there’s no scientific result that sleeping position affects your back, here are some interesting facts that have been discovered.

178493
Sleep Position

You changed into your pajamas, turn off the lights, and get yourself ready to sleep. How do you prefer to sleep, on the back, on your side, or on your tummy? Although there’s no scientific result that sleeping position affects your back, here are some interesting facts that have been discovered.

Keep Reading... Show less
Featured

How to Throw the Ultimate Winter Bash

As the year starts to come to an end, make sure you find the time to have some fun as well.

122782
Ultimate Winter Bash

As the year starts to come to an end, make sure you find the time to have some fun as well.

Keep Reading... Show less
Facebook Comments