Tricks to help you save money on taxes if you worked from home in 2020

Are you one of the millions of people who have been forced to work from home over the past year? Taxfix reveals some tax tricks that expats should pay attention to, to get the most out of their tax returns. 

The COVID-19 crisis has forced millions of people to work from home since March 2020. Now that you don’t commute to work anymore, your home has become your “home office”. This change has probably had a major impact on the way you work - and it also impacts your taxes. 

Here’s how you can make the change work for you, tax-wise. 

What counts as a “home office”?

In theory, anyone (including expats) who has worked from home in 2020 can deduct their home office expenses from their tax bill. However, the German tax office has strict guidelines for defining a home office: 

• It must be a separate room.
• It must be directly connected to your private living space (i.e. in the same apartment or in the same family home).
• 90 percent of it must be used professionally.
• If the room is only used for certain tasks and no other work space is available, you may claim up to 1.250 euros per month for this space.
• If the room is used for professional activity only, the costs incurred can be deducted as income-related expenses (Werbungskosten) if you’re an employee, or as business expenses (Betriebsausgabe) if you’re a self-employed person or a trader. The amount you can deduct is unlimited. 
• In some cases, costs for water, heating, electricity, renovations, and even furniture purchases, can be deducted from your tax bill.

Worth noting: the presence of a guest bed or an exercise bike can be enough for the tax office to determine that your workspace is not a “home office”. 

Are there tax allowances for working from home in Germany?

Yes! In fact, a subsidy was passed during the COVID-19 crisis regarding the costs and tax deductibles associated with home offices. 

Those who did not work from a separate room, but still mostly worked from home, can still claim costs - 5 euros per day for a maximum of 120 days - which means they can save up to 600 euros in total. 

This can only be claimed for the days on which you worked exclusively from home. 

Does my home office have to be in Germany for me to claim expenses on it?

No. The location of the home office depends entirely on what the employer and employee have agreed.

Can I claim work material for tax purposes?

Some work equipment is tax-deductible. However, the ultimate decision lies with the tax office. There are plenty of ways to reimburse work equipment - you can discover them all on the Taxfix app. For instance, you can deduct the cost of a desk bought specifically for working in your home office.

Can I claim the commuter allowance (Pendlerpauschale) if I have been working from home?

The commuter lump-sum (Entfernungspauschale) lets you deduct 30 cents per kilometre from your tax bill for your daily commute to work. Up to 4.500 euros can be claimed as income-related expenses without proof in the tax return. It does not matter whether you have travelled by car, public transport, or bicycle.

However, those who have worked from home cannot make use of the commuter allowance - since, by definition, they have not been commuting. 

Do I need a tax advisor for the 2020 tax return?

No, you don’t need to spend money on a tax advisor for 2020. Tax apps like Taxfix are well-equipped to guide expats (even those with zero tax knowledge) through their tax returns. All you need to do iis answer a few simplified questions. If you so choose, Taxfix can then send your encrypted tax return directly to the tax office. 

The tax experts at Taxfix are adept at this process and can calculate your tax returns with accuracy. The app also addresses all of the above-mentioned home office tax changes so that you can make the most of your tax return. 

The Taxfix app - available in German and English - offers expats a quick, easy, and paper-free method to file tax returns.