Potential tax deductions related to pandemic this year? Why they might not apply to everyone
WILMINGTON NC (WWAY) — After the Christmas season comes the tax season. With more people working from home and businesses taking out loans, are there any deductions you can take?
It might be harder than you think.
In 2018, attorney and CPA Wesley Casteen says Congress raised the standard tax deduction, almost doubling it. Because of this, he says a lot of people aren’t able to itemize their deductions anymore.
That means people aren’t able to write off certain extra business expenses they have.
If you are working from home, Casteen says some people can qualify to take a deduction for their home office. But in order to qualify, that space must only be used specifically for that work and nothing else.
“You allocate a percentage of the square footage for that room and compare that to the house overall, and you take a fraction of that against the expenses related to maintaining the home,” Casteen said. “Repairs, maintenance, utilities. That kind of thing. There’s a safe harbor or simplified way to do it, and if you qualify for the home office deduction based upon routine use and exclusive use, you can take a $5 per square foot deduction up to $1,500.”
If you do have more expenses related to work, especially if you’ve been working from home, Casteen encourages you to get reimbursed through your employer.
If you’re temporarily working from home, he explains it’s not likely you’ll be able to take deductions for equipment like laptops, computers, monitors or other electronics. Casteen also says you can only deduct based on the amount of use the piece of equipment is actually used for business.
For business owners who participated in loan programs like the Paycheck Protection Program, Casteen says the regulations around repayments and substantiating those loans haven’t been finalized.
He advises those business owners to wait until the regulations are finalized because there is legislation in Congress right now to potentially forgive certain loans.
Regarding medical expenses, Casteen says deductions for medical expenses are usually limited to expenses paid out of pocket. If they are paid out of pocket, h says they could qualify for a deduction if they’re more than 7.5% of that person’s gross income.
For people who have insurance, Casteen says medical expenses are usually not deductible anymore.
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