Home Office Deduction and Your Tax Questions for 2025
You have tax questions, and we have the answers. Let’s tackle everything you need to know about filing your 2025 taxes right here.
This Week In Your Wallet: Home Office Deduction
“Can I claim the home office deduction since I've been working remotely for most of the year?” This was the question posed by my daughter's boyfriend, but he’s not alone in this inquiry. Many are curious about their tax options.
We’re entering a unique tax filing season, starting Friday. Key topics include the taxation of stimulus checks, implications of unemployment benefits, and that all-important home office deduction. Here’s a snapshot of answers to your pressing tax questions:
Stimulus payments = not taxable.
Two rounds of payments were issued: the first up to $1,200 per individual and $500 per child under 17, and the second up to $600 per individual and $600 per child under 17. Eligibility for full payments was based on income levels: $75,000 for singles, $112,000 for heads of household, and $150,000 for married couples. Payments phased out at $99,000 for singles and $198,000 for married couples. If you didn’t receive your full amount, you can file a return to claim a rebate recovery credit. This situation arose because the IRS used outdated tax information from 2018 or 2019. If your income decreased in 2020, you can still claim those funds. Additionally, if you welcomed a new child, you can claim that credit too.
Unemployment payments = taxable as regular income.
If taxes weren’t withheld from your unemployment benefits, you’ll owe those amounts now, both state and federal, unless you're in a state without income tax. Whether you end up paying out of pocket depends on your refund size.
Emergency retirement withdrawals = the three-year clock is ticking.
While the 10% penalty on withdrawals up to $100,000 has been waived, the income remains taxable. The IRS offers two options: pay taxes evenly over three years, or in the year you withdrew the funds. Alternatively, you can return the money to your retirement plan within three years to avoid taxes, although you'll have to report the income during those years.
Home office deduction = not available for employees.
This is a hot topic this tax season. Employees can’t deduct the costs of equipment purchased while working from home, though employers can if they reimburse those expenses. If you’re self-employed or a contractor, you can still take the home office deduction. This allows you to claim a portion of your rent or mortgage, plus expenses related to the designated business space, or simply $5 per square foot for up to 300 square feet. If you worked from another state, you may also owe income taxes there.
Women and Wealth Building
A long-standing hesitation among women to invest in stocks has hindered their ability to build substantial wealth necessary for comfortable retirement. A study revealed that nearly half of female clients have 90% of their wealth in low-yielding cash or fixed income assets.
Black women face even greater challenges. Recent insights highlight effective wealth-building strategies for Black women, including homeownership and entrepreneurship. They often encounter significant setbacks earlier in life, such as health issues or relationship changes.
For those interested in turning hobbies into side hustles or full-fledged businesses, there are plenty of resources available.
Wedding Trends During COVID
An interesting analysis showed how couples are spending less on wedding essentials like dresses and venues but investing more in larger and more extravagant diamond rings.
In a recent feature, the diamond industry was explored, revealing the rise of lab-grown diamonds that are virtually indistinguishable from mined ones, priced at about $800 per carat.
So, if you were to choose, which type of diamond would you prefer?