WORKING AT HOME? HERE’S WHAT YOU NEED TO KNOW

In response to the COVID-19 pandemic many individuals are now working at home.  Here are some important things to understand if you are one of these individuals.

* Just because you are working from home does not make you “self-employed”.  If you have been a W-2 employee and you are working at home, either for your personal health or convenience or because your regular office is closed and your employer requires you to work at home, you will continue to be a W-2 employee.

* An employee receiving a W-2 cannot deduct any unreimbursed out of pocket “employee business expenses” anywhere on their federal Form 1040.  This includes the allocated expenses of a home office.  New York does still allow the deduction of employee business expense, subject to the 2% of AGI exclusion, if you itemize on your NY state income tax return.

* You cannot be both an employee and a self-employed sub-contractor for the same employer/company if you are doing the exact same work.  You cannot legally receive both a W-2 and a 1099-NEC from the same employer/company for doing the exact same job.

* The exclusive-area and exclusive-use requirements for a deductible home office for self-employed sub-contractors still apply.

* A self-employed sub-contractor receiving a Form 1099-NEC is not eligible for any employee benefits such as employer-provided health or life insurance, employer contributions to a retirement plan or HSA, or accrued sick or vacation pay. 

* A self-employed sub-contractor receiving a 1099-NEC must pay both halves of the applicable FICA (Social Security and Medicare) tax.  A W-2 employee pays half and the employer pays half. 

* A self-employed sub-contractor cannot collect state unemployment benefits under “normal” circumstances.

See my earlier post “Don’t Expect a Home Office Deduction for Employees on Your 2020Form 1040”.  

Any questions?

TTFN

WHAT’S THE BUZZ, TELL ME WHAT’S A HAPPENNIN’?

Obviously, I am not a fan of flawed and expensive tax preparation software.  But I do find that the Turbo Tax blog often provides good information.  However, its slogan – “It’s all about the refund” – is WRONG.  What too many taxpayers do not understand is it should NOT be all about the refund – it should be all about the tax liability!

* Have you subscribed to my free monthly e-mail tax newsletter yet?  Click here to see the August issue. 

 

You can subscribe to this free monthly e-letter by sending an email to rdftaxpro@yahoo.com with ROBERT D FLACH’S 1010 EMAIL LETTER in the subject line.

 

* A Facebook tax pro group member posted some information from a CSEA (California Society of Enrolled Agents) IRS Panel Discussion.  The first three -

“1) New audits being opened again

2) Most will be remote audits

3) IRS was receiving 1M pieces of mail per week during shutdown.  Will take a while to catch up.  Opening 5M pieces a week but still receiving mail.”

 

* Brett Hersh, the OVERNIGHT ACCOUNTANT, new to me, provided a detailed primer on “Deducting Business Meals, Real Estate Agents and Sole Proprietors” 2 weeks ago (just discovered this thanks to Joe Kristan).

 

“The rules are confusing and accompanied by a great deal of rumor and misinformation.”

 

* We begin a trifecta from the FORBES.COM TaxGirl Kelly Phillips Erb with “Despite Questions, President Trump Issues Executive Order To Create Temporary Payroll Tax Cut”.

 

This is currently a deferral of, I believe, 4^th Quarter 2020 federal payroll taxes – Social Security and Medicare taxes.  And it is clearly an act by Trump to try to make himself look good when Congress failed to act on additional stimulus legislation (if you ask me the breakdown of the talks was purposely orchestrated by Republican leaders so Trump could make this move).  We all know that Trump could care less about the plight of the American people – and his only interest is in staying in the White House.

 

As Kelly says (highlight is hers) - “There’s a lot to unpack here, so stay tuned: more is sure to come.”

 

* A good reminder from KPE in “Working From Home? You May Not Be Able To Claim The Home Office Tax Deduction” (high light is KPE’s)-

 

“As a result of the Tax Cuts and Jobs Act (TCJA), for the tax years 2018 through 2025, you cannot deduct home office expenses if you are an employee.”

 

I weighed in on the subject of a home office deduction for employees forced to work at home during the pandemic in “Don’t Expect a Home Office Deduction for Employees on the 2020Form 1040”

* And KPE explains “Even COVID-19 Can’t Stop Sales Tax-Free Shopping” and provides “a look at states offering taxpayers a break on sales tax for back-to-school items this year”.

 

BTW – congratulations to KPE for being named the National Association of Enrolled Agents’ “2020 Outstanding Supporter of Enrolled Agents”!

 

THE LAST WORD

 

The 2020 election truly is a referendum on Trump.

 

You are either for Trump, or

 

You have a brain and a conscience.

 

TTFN

BELIEVE IT!

 

"He will lie. He will cheat. He will steal. He will break laws. He will collude with Vladimir Putin. The only way to rid our country of the most Criminally Corrupt President in our Nation’s history is with massive turnout. Vote as if Democracy depends on it. Because it does."

Rob Reiner

Believe it – the future of American democracy and American values truly does depend on removing Trump and his heinous Administration from the White House.

TTFN

TRUE DAT!

FORGET POLITICS

Forget about politics. It is Trump's personal actions and lack of humanity and character that make him totally unacceptable.

We must NEVER AGAIN allow such a worthless piece of trash to be a candidate for President, let alone President.