Roughly seven and a half months have passed since the pandemic forced many employees to work from home (WFH). In that time, companies have gone from asserting they would return to office space in a few months to a long-term or permanent remote work approach. Many of those companies offer work from home stipends to help their workforce transition more smoothly. In other cases, employees have had to dig into their own pockets to improve their home office set up. Are WFH expenses tax deductible? Can employees write them off on their taxes?
Work From Home Expenses Are Not Tax Deductible
The passage of the Tax Cuts and Jobs Act in 2017 removed several itemized deductions. Unreimbursed work-related expenses were part of that list. While the term is big enough to include things like business mileage and work from home expenses, it has not changed due to the pandemic.
Asking employees to shoulder the burden of work from home expenses, on top of their other personal expenses, is not fair. Especially if the company benefits from an employee’s boost in productivity without enabling it. This is one of the many reasons employers should pay their employees a work from home stipend. What’s more, employee expenses aren’t deductible on personal income taxes, but employers can pay tax-free WFH stipends when they comply with IRS guidelines.
Considerations When Paying a Tax-free Work From Home Stipend
In order for a work from home stipend to be non-taxable, it must meet certain criteria. Rather than a flat stipend where the company awards the same amount to all employees, the reimbursement should be based on specifics.
Employers should consider what it takes to work in a remote location. Many employees are using personal devices for their work phone. Many have no choice but to use their home internet connection. Others have nothing more than a kitchen table to set up as their workspace. Also consider the costs of electricity, rent and other office staples.
Mixed use assets can be a great solution and a fair approach to support a remote work initiative or even a work anywhere policy. But a fair approach must also be accurate. Employers must bear in mind the connectivity demands are not the same across roles in the organization. Team members that must be reachable during hours outside the typical work day don’t have the same balance of asset use as those that have firm start/stop times. Is your head spinning yet?
Consider Your Work From Home Stipend Taken Care Of
There are uncountable layers employers can dive through, figuring out what they should reimburse their employees for, and how much. Luckily, Motus has figured all of that out for you. Through our Remote Work Reimbursement offering, no matter where your employees are located and what their connectivity demands look like, the Motus platform makes calculating and managing fair and accurate reimbursements effortless for the employer. Interested in learning more about our remote work reimbursement solution?