On May 19, 2020, Norman Lencz was quoted in Law360 on the possibility of reinstating the deduction for home office expenses, as many employers maintain company policies that allow employees to conduct business remotely during the COVID-19 pandemic.
According to the article, many workers are upgrading their kitchens, spare bedrooms, and hallways with makeshift workstations replete with multiple monitors, laser printers, and other needed office equipment. Unless Congress changes the tax law to reinstate the deductions for miscellaneous unreimbursed business expenses in a coming pandemic relief bill, those business-related upgrades made by employees won't be deductible on their tax returns come next April.
Lencz told Law360 the price tag of reinstating the home office deduction may make it politically difficult. Six months ago, before the COVID-19 outbreak, the cost of restoring the deduction would have been much lower, Lencz said. Now the revenue loss would be higher since "pretty much everyone is working at home and there's a possibility of this continuing for some time," he said.
Employers who reimburse workers for purchasing home office equipment may also face pitfalls under current law when the businesses try to write off the cost, Lencz said. "If they reimburse you for a printer, or pay for your computer, it becomes a question of: Is it personal or is it business? Is the employee getting a benefit beyond using it to meet business needs?" he said.
Lencz advised that companies providing office equipment to workers who have home offices should put a policy in place that says when an employee quits, the property will be returned to the business. The policy should also clearly state that the property is intended only for work use, not for personal use, he said.
Employers must also ask whether large expenditures on behalf of an employee are truly work-related and deductible, Lencz said. "Or, to what extent is it disguised compensation because it's really for the personal benefit of the employee?" he said. "So long as you're not abusive or egregious, it should be OK."
Click here to access the article.
According to the article, many workers are upgrading their kitchens, spare bedrooms, and hallways with makeshift workstations replete with multiple monitors, laser printers, and other needed office equipment. Unless Congress changes the tax law to reinstate the deductions for miscellaneous unreimbursed business expenses in a coming pandemic relief bill, those business-related upgrades made by employees won't be deductible on their tax returns come next April.
Lencz told Law360 the price tag of reinstating the home office deduction may make it politically difficult. Six months ago, before the COVID-19 outbreak, the cost of restoring the deduction would have been much lower, Lencz said. Now the revenue loss would be higher since "pretty much everyone is working at home and there's a possibility of this continuing for some time," he said.
Employers who reimburse workers for purchasing home office equipment may also face pitfalls under current law when the businesses try to write off the cost, Lencz said. "If they reimburse you for a printer, or pay for your computer, it becomes a question of: Is it personal or is it business? Is the employee getting a benefit beyond using it to meet business needs?" he said.
Lencz advised that companies providing office equipment to workers who have home offices should put a policy in place that says when an employee quits, the property will be returned to the business. The policy should also clearly state that the property is intended only for work use, not for personal use, he said.
Employers must also ask whether large expenditures on behalf of an employee are truly work-related and deductible, Lencz said. "Or, to what extent is it disguised compensation because it's really for the personal benefit of the employee?" he said. "So long as you're not abusive or egregious, it should be OK."
Click here to access the article.