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Tax authority: Claim tax relief for working from home

Taxpayers can claim deductions for home offices, broadband connections and furniture.

Telecommuters can reduce the amount of tax they pay by claiming for costs associated with working from home. Image: Niko Mannonen / Yle

Tens of thousands of people across Finland switched to telecommuting or working from home, either full time or in part, at the outbreak of the coronavirus epidemic last spring.

With the deadline for declaring 2020 income to the tax authorities approaching, telecommuters are now being reminded to adjust or update their pre-filled tax declaration forms in line with how and where they worked last year.

This guide explains some of the key issues to be aware of when updating a tax declaration for 2020.

Commuting expenses may require updating

Every tax year, workers can claim commuting expenses for travelling to and from work, which is usually calculated according to the least expensive means of transportation.

The taxpayer’s own liability threshold is 750 euros, while the maximum deduction is 7,000 euros.

For the 2020 tax year, telecommuters should therefore adjust their travel expenses accordingly, as the amounts may have changed significantly from the first submission of the pre-filled declaration, although claims for before the epidemic should still be submitted.

"If, for example, a monthly public transport ticket had already been purchased for March, then it will be accepted as a reduction based on commutes from the beginning of the month, even though the recommendation for telecommuting was only issued in the middle of the month," the tax administration’s senior officer Päivi Ylitalo explained.

In 2019, a total of 1.6 billion euros was deducted from salaried income for commuting expenses, but the authority expects this figure to reduce dramatically for 2020.

Be honest about travel expenses

In relation to travel expenses, the tax authority also issued a warning that telecommuters should avoid reporting incorrect or unreasonable declarations.

For example, if the taxpayer only worked from home every second week, then the commuting expenses should only be claimed for those weeks or days when the worker travelled to their place of work.

"If, from the declarations, the authority concludes that the client has applied for an unjustified deduction, they may be ordered to pay extra tax. In addition, of course, they will also lose the right to the deduction," Ylitalo warned.

The amount of extra tax accrued in such situations is linked to the amount of the reduction unduly claimed.

Deductions for working from home

The loss of tax deductions for commuting can, however, be somewhat offset by claiming for the costs of working from home. For a taxpayer who telecommuted on a permanent basis, the possible reductions may be in the same range as the amounts available for commuting.

The tax authority automatically grants taxpayers an income tax deduction of 750 euros for 'expenses for the production of income', which is available even if the taxpayer works every day at the employer’s premises, using company equipment.

In the case of working from home, this basic deduction may not, however, be sufficient to cover the costs of full-time telecommuting. Therefore, the tax authority has provided instructions on its website (siirryt toiseen palveluun) of costs which may be considered tax deductible.

For many telecommuters, this can include such items as computers and data communications connections, converting a home space into an office space, as well as study and training expenses.

Home office spaces

The maximum deduction for a home office (siirryt toiseen palveluun) is 900 euros per tax year, and it is available for workers who have been telecommuting for at least half of the working days within that tax year.

If the number of remote days is less than half of the total number of working days, the deduction falls to 450 euros, and drops further to 225 euros if the taxpayer has only occasionally worked from home.

However, if a worker had to rent a separate office or work space, outside of the home, then they must submit a separate declaration along with receipts to the tax authorities.

Internet connection costs can be deducted in full

Telecommuters can also claim for monthly broadband charges as a tax deductible allowance.

Full monthly payments can be deducted for those months when telecommuting was done on a full time basis. If the work from home was more occasional, then the amount deducted will be reduced by half.

"Only the costs related to the period of telecommuting can be deducted from the monthly charges for internet connections. Entertainment packages that may be related to the fee cannot be reduced," Ylitalo advised.

Other items, such as the purchasing of an additional computer monitor, an office chair or a desk, may also be accepted by the tax authority as tax deductible expenses.

Update declaration no later than spring, authority asks

The tax administration added that it hoped taxpayers would update their declarations via the OmaVero online service as soon as possible, but no later than the spring.

"Adjustments should be made no later than when the pre-filled tax declaration has arrived either by post or electronically in OmaVero," Ylitalo said.