The recent introduction of the Coronavirus has prompted several employers to encourage or require their employees to work from home. Obviously, not everyone can work from home because not everyone’s jobs can be done from a remote location.
When employees work from home, there are legal implications for the employer and the employee.
For employers whose employees work from home, there are additional or different income taxes that may be incurred as a result of employees’ earning money for the employer while at the employee’s home.
Generally, an employer with a fixed place of business will pay income/payroll taxes to the municipality and school district where the place of business is located. However, when an employee works from home in a community different from the employer’s business location, most municipalities and schools where that employee is living usually require the business to allocate a portion of the business’s income to the employee’s home municipality or school district.
For employees, particularly those who have never worked from home before, the thought of working from home can be exhilarating. Those employees may dream of multi-tasking housework while on conference calls and sneaking in a few catnaps. However, working from home, for a short or long time period, requires immense self-discipline and adjustments of expectations, especially for outgoing people who rely on “watercooler talk” to satisfy some of their daily needs for social interaction.
Further, working from home must be carefully considered before being undertaken. If the employee lives in a condominium or subdivision with a homeowner association, there are likely rules and requirements regarding working from home. In such circumstances, if someone stays in their home and conducts clerical work from home, the concerns are likely minimal.
However, if the employee hosts visitors as a part of the job (i.e. some sales work) or works in a service business that does not have direct interaction with other people (i.e. jewelry assembly or product re-packaging), the increased traffic associated with bringing work into a home can run afoul of condominium or homeowner association rules.
Employees working from home may desire to seek reimbursement or tax deductions associated with the business use of a home. For instance, working from home can require more electric or gas usage in order to keep the home at a comfortable temperature when the home may otherwise not be occupied during the day. Additionally, faster internet service or installation of landline phone service may be required solely to accommodate working from home.
For self-employed people who work from home, the rules on tax deductions for some utilities and rent/mortgage payments have been simplified in the last few years. However, for those who work from home for someone else, there are additional requirements that must be satisfied in order to deduct various business-required expenses from the employee’s taxable income calculation. The IRS’s website is the best place to find detailed yet simple-to-understand explanations of what can and cannot be deducted from taxable income for employees who work from home for someone other than themselves.
Lee R. Schroeder is an Ohio licensed attorney at Schroeder Law LLC in Putnam County. He limits his practice to business, real estate, estate planning and agriculture issues in northwest Ohio. He can be reached at Lee@LeeSchroeder.com or at 419-659-2058. This article is not intended to serve as legal advice, and specific advice should be sought from the licensed attorney of your choice based upon the specific facts and circumstances that you face.