Tax Breaks & Incentives for WFH Employees

As full-service interior designers, we are responsible for advising our clients on spending and budgeting, along with presenting our creative designs.

We’ve been working on a growing number of work-from-home (WFH) spaces for residential clients and businesses; examining the costs and expenses of today’s distributed teams from new angles.

We are sharing some of the trends and opportunities we’ve discovered this year.

Trending WFH Incentives & Budgets

In addition to the standard employee benefits, the forward-thinking tech companies we work with — typically in the Bay Area — are supporting their WFH employees by offering a mix (if not all) of the following:

• Internet stipend: Average $50/month
• Equipment and furniture stipend: $200 — $1,000, or by special request only
• Wellness budget: Average $100/month
• Meals and snacks: Ranging $15-$35/meal, variable frequency special occasions, 1x — 5x a week
• Computer: Standard issued equipment to all employees
• Ergonomic consultation: To ensure employees have a safe and healthy work experience
• Virtual team events and classes: To continue fostering a collaborative and growth-forward environment
• Interior design support: To facilitate consistent on-brand camera experiences across teams

There is no standard one-size-fits-all template. The best solutions are feedback-driven and tailored to your company’s work style and mission.

Tax Breaks For Employees

Tax breaks for work from home employees are available in Alabama, Arkansas, California, Hawaii, Minnesota, New York, and Pennsylvania. On the federal level there are very few options for a home office deduction for W-2 employees (unless you are a government official or in the armed forces reserve). There have been a lot of changes to the requirements of working from home due to Covid so likely this could be a new opportunity to take advantage of this year (and next).

We’ll focus on our home state of California but each state listed offers some version of reimbursements for qualifying W2 employees. Speak to your CPA on how these benefits apply to you. In California, generally, you can take a home office deduction if your home office is a requirement of employment, necessary for the employer’s business, and needed for you to perform your responsibilities. You can include deductions if your expenses are more than 2% of your adjusted gross income, not including any employer reimbursed expenses. Expenses can be furniture (ergonomic and not), a portion of your utilities based on the square footage, repairs, mortgage or rent, etc. Don’t forget that you have other itemized deductions that can help your reach the 2% range. However, because of the 2% requirement, it will be hard for everyone who works from home to access this deduction. Again, talk to your CPA or tax preparer for advice on your deductions and how this can apply to you.

If you are self-employed, you have a lot more opportunity for home office deductions even if you have an office outside of your home.

When you think about it this way, employees who incurred new costs from their now work-from-home arrangement without the opportunity for tax deductions similar to ones a business would receive employees are essentially receiving an unacknowledged reduction in take-home pay.

Missed Opportunities When Working-From-Home

Working from home though it has its benefits, is missing some key perks and experiences to working from the office. Such as:

• A physical connection to your brand and culture
• A quiet space to work
• A dedicated desk, office, or workspace
• Reliable access to professional video conferencing
• Meeting space or a quiet call room
• Cleaning staff (you don’t have to clean your workspace)
• Internet and tech resources that are maintained by the facilities team
• Work storage
• Catering, snacks, and beverages
• Workspace equity

By working with a commercial and residential interior designer, Rose Design, you can bring some perks back and amplify the HQ experience to your employees at home with:

• 1:1 tailored design support
• Adapted company WFH guides with workplace best practices for a consistent and on-brand work-from-home experience
• New touchpoints for merging your online and offline company culture
• Greater consistency in video conferencing and the WFH experience
• Installation guides provided to execute the WFH recommendations
• COVID-19 friendly service executed remotely

Interested in learning more- Contact us today to set up a call.