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The tax season is here, and if you’re a shift worker like me, the last thing on your mind right now will be taxes! Fortunately, the IRS extended the deadline to May 17 to give Americans some flexibility during this stressful and abnormal time.
Many people dread this time of the year, but filing tax returns should not be a scary process. The federal and state governments offer tax benefits to workers to increase tax refunds.
You should consult a trustworthy certified tax professional, get your paperwork ready, and examine the latest tax tips related to your profession for claimable benefits. So while you’re considering spending your subsequent tax refund, use the below information to claim deductions.
Before we jump in, the information presented here should not replace the advice given by your accountant. I’m a savvy nurse who’s done her research and wants you to save a few dollars BUT I am not a financial adviser or accountant. Also, as an Australian, the information presented here is targeted towards our US readers. I got some help writing this one as the American Tax System is not as familiar to me. I hope you enjoy it.
Latest Tax Updates for 2020/2021
Every shift worker is in a unique situation based on their state and profession. The IRS provides regular updates, and checking their website will keep you familiar with tax codes and regulations. Below are few changes in U.S. tax laws for 2021:
- Increased tax brackets
The house income tax bracket will determine your tax rates. Although rates for 2020 remained the same, the tax bracket appreciated by a few hundred dollars to justify inflation.
- Disaster relief checks
The government provided $1200 in aid to millions of Americans as compensation for the 2020’s shutdowns because of the global pandemic. These relief checks are not taxable but identified as refundable tax credits.
- Increased standard deduction
This year tax deductions appreciated by $200 for couples or individual filers, $400 for couples filing together, and $300 for home heads. Shift workers can also itemize deductions if the costs supersede the standard method.
(source)
The one thing that hasn’t changed is the need to save all your documentation!
Tax rules are different in every profession, but it is essential to keep records.
Are you a day-care provider, police officer, manufacturing engineer, factory worker, firefighter, or hospital nurse working shifts?
Start documenting your work-related expenses from the beginning of the year and keep records of meals, subscriptions, etc.
For the Aussie like me here, the ATO has a great app that can keep all those records for you.
(source)
Itemized VS Standard Deduction
After identifying what expenses are claimable, understanding the difference between itemized and standard deductions is essential.
Stick with me here. I’ll explain it step by step below. Or jump a step and watch the video (I feel like my dad is explaining tax to me in this video – which is great!).
Shift workers cannot claim tax deductions with both methods on one item, such as work uniforms and lots more. Create a total for your expense, and if it is beyond the standard procedure, use the itemized strategy.
| Itemized Deductions | Standard Deduction | |
|---|---|---|
| Benefits | You can claim more expenses | It’s convenient and efficient |
| You can save more money | Many taxpayers are eligible for higher deductions | |
| Anybody can claim it | ||
| Drawbacks | Requires more effort and paperwork | Filing limitations |
| Restrictions | You may get a smaller deduction | |
| Itemized deductions |
The next section explores both options in more detail. If you feel familiar enough, just skip this bit until you reach How Shift Workers Can Maximize Deductions.
Standard Deduction
This method is the government’s in-built subtraction strategy for tax filers. Anyone can use the standard method yearly, and you can get it based on your filing age, status, spouse age, and disabilities. Blind people aged 65 or older are beneficiaries and will get double benefits. Here are other benefits;
It’s convenient and efficient
The standard method will make your life easier. It is an automatic process that requires less time and effort for tracking costs.
The technique saves workers the time for filing a Schedule A form or providing documentation. You don’t need a comprehensive understanding of tax law to use this option.
Many taxpayers are eligible for higher deductions
Disability and age qualify some people for an increase in their deduction. Blind filers at 65 years or older are eligible for an additional deduction of $1,300 to $1,650 based on their state and filing status.
Anybody can claim it
Anyone can use the standard option without qualifying for the itemized method. The method is an excellent choice, but the system is not without flaws.
Drawbacks of the Standard Deduction Option
Filing limitations
Using the standard strategy when you’re married and filing without your spouse is not advisable, especially if your partner uses the other option. You can also have limitations if you depend on someone else’s taxes.
You may get a smaller deduction
The method can attract lower benefits when compared to the itemize strategy. Your benefits may be lesser than the contributions or other interests you’ve paid.
Itemized deductions
This strategy involves work costs removed from your AGI to minimize taxable wages. It can result in different amounts and claimable on a Schedule A form into categories such as taxes and causality losses and charities.
Benefits of Itemized Deductions
You can claim more expenses
Medical bills and property taxes are few expenses allowed with an itemized method. There are limitations with some categories, but individuals with large mortgages and a history of generous charity donations may get more significant benefits with the itemized strategy.
You can save more money
The option lets taxpayers claim an increase in a tax refund. For example, if your income is in the 24% tax bracket, you will see a 24 cent tax savings on every dollar exceeding the standard method.
Drawbacks for Itemized Deductions
Requires more effort and paperwork
The itemizing option is a manual process requiring expenses tallying and documentations, unlike the automatic standard approach. It can be time-consuming because of the number of deductions and records. It may also not minimize your taxable income enough to justify the effort
Restrictions
The Tax Cuts and Jobs Act put limitations on this method for local and state taxes and property taxes at $10,000.
How Shift Workers Can Maximize Deductions
Keeping a record of expenses is essential if shift workers want to claim deductions. There are some deductions not available under federal law, but you may claim them under state law.
Examine your state deductions or reach out to a tax professional to ensure you claim the necessary expenses.
A professional can help shift workers file a tax return to score a state tax benefit. Doubling your itemized deductions can make you eligible for using the option in a given year.
Check your charitable contributions and ensure you complete payment for property tax before the year runs out. These generous donations will increase your chances.
Potentially Tax Claimable Items For Shift Workers
Some employees work more than the regular eight-hour shift in different organizations. Examples include nurses, security guards, day-care providers, firefighters, bus drivers, doctors, and lots more.
Employees may claim deductions on expenses like travel, food, rentals, lodging, and other business-related payments.
It means people working on a 24-hour shift can deduct lodging and feeding expenses arising as a condition to improve their work productivity. (source)
Lets dive into a few tax deductions and breaks claimable for shift workers.
Food
Employers usually furnish meals to employees as part of worker’s compensation which falls under the Internal Revenue Code 119. It states that the meal expenses will not be part of the worker’s gross income. However, workers must get the meal on the employer’s business premises and accept it as part of employment benefits.
Related Food Posts if you’re feeling peckish: 10 Healthy Snacks Ideal for Hungry Night Shift Workers
Professional levy
If employees pay a union or membership fee to any business-related body, you can claim the costs. If any business trip requires a professional levy, the expense is also tax-deductible.
Uniforms and upkeep expenses
If you work in a company that requires uniforms, the IRS rules state that the cost and maintenance of work clothing are deductible. You can claim a deduction if you cannot wear those clothes as ordinary streetwear.
Company uniforms usually have the employer’s emblem attached to indicate its use for office work. You can also get deductions from protective clothing such as goggles, shoes and lots more.
Computer/Laptop
If you use a personal computer for work purposes, depreciation is a claimable cost based on the legitimacy and level of activities.
Equipment and repairs
If you want to claim deductions, the purchased or repaired item must be essential to work productivity. Keep a separate record of the expenses from other business asset supplies above $100 and last longer than twelve months.
Nurses and those working in healthcare, do you need some new gear for work? You’ll love this post.
Subscriptions
Subscriptions to books, magazines, or journals to stay current and improve your job are claimable expenses.
Is A Lunch Box Tax Deductible?
Business owners can reap considerable tax returns for giving workers lunch boxes. Business owners will get tax returns for recording the cost as a business expense while workers enjoy free meals. The lunch box should serve a business purpose if you want to claim the benefits.
There are specific rules from the IRS guiding work meals for tax reasons. Understand the difference, and it will have a significant impact on your tax burden. Lunch boxes from business owners are tax-free to the worker and 100% deductible for the employer if it meets any of the following conditions. (source)
On business property
This location can be a bakery, store, or lunch hall controlled by the employer. Workers must get the box on or near the business property, run by the owner or a hired associate.
For convenience
Employers can claim lunch box tax if employees get it for a valid business reason instead of additional compensation. Giving workers the emergency calls task during a lunch break is an important reason. The benefit does not apply in every case, and business owners will not benefit from lunch boxes sent to workers on their days off work.
Still hungry? Get stuck into this – Healthy Meals for Shift Workers (with Recipes and Videos)
Are Any Meals 100% Tax-Deductible?
The Tax Cuts and Jobs Act state that you could not claim 100% tax benefits on entertainment costs, but there are exceptions such as meals with business benefits. However, they set standards, and meals in the following categories are 100% deductible.
- An inexpensive meal
- A meal before, during, or after a business meeting.
- Work-related meals.
- Meals at a business meeting with the CEO
Although, some meals fall into the business cost category when they relate to a trade or business with valid paperwork. You can now classify meals into 50% or 100% categories for a deduction. Below are few claimable benefits while filing your tax refund.
Related: 12 Valuable Meal Prep Tips for Busy Shift Workers
100% tax-deductible meals
- Shift workers can claim 100% tax benefits on meals at events, conferences, and parties hosted by the company.
- You can claim benefits on promotional campaign foods available to the public at zero cost.
- Meals provided at a charity sporting event. Organize for non-profit organizations and give them the proceeds.
- Claim benefits on food for the public, instead of only staffs for sales representation or advertising.
- Employer gives lunch boxes to workers on business premises during work hours.
- Meals provided by a restaurant to workers at the office
- Shift workers can claim deduction on meals provided to workers during or after shifts if the business trades food.
(source)
Is Moving For Work Tax-Deductible?
Are you moving to work? It would be best to read through the latest tax regulations connected to moving costs in your profession.
The previous tax law allows shift workers to claim moving costs deduction through taxes.
But the case is different with the new reform as it does not allow most taxpayers to claim deductions on moving expenses except active military personnel. The new law came into effect, affecting both organizations and tax filers.
(source)
The new law eradicates any tax-deductible expenses for moving and minimizes tax rates for many. Some of the changes include the increment of the standard deduction, excluding personal exemptions, and reducing specific deductions.
Before the Tax Cuts and Jobs Act in 2017, shift workers can claim moving expenses tax benefits. The IRS allowed people to claim moving deductions for work-related purposes with specifications classified into the below categories:
Time requirement
Your moving cost must directly relate to the beginning of the project if you want to reap tax benefits. It means tax filers should work for 39 weeks in the first year of moving.
Distance requirement
If you want to prove that the movement was for work, keep at least 50 miles between the old and new locations.
The above requirements let you reap tax benefits on moving costs through the federal income tax law. However, the expenses should involve any of the following:
- Hire packers or professional movers.
- Renting a moving truck
- Move supplies like boxes, etc.
- Insuring movable possessions during a move
- Disconnecting and reconnecting utilities because of the move
- Moving your car
- Storing movable possessions for up to 30 interrupted days after moving
- Work-related temporary lodging
- The cost of parking fees, gasoline, tolls, and other work expenses
(source)
What Are The Tax-Deductible Commuting Expenses?
Commuting involves business travels from one location to another, driving to work or using other means of transport such as taxi, bus and lots more.
The cost of driving to work or using other transport options is a commuting expense. These costs are not tax-deductible even if you attend to business needs during the journey.
For instance, if you move materials from your workplace to the house or vice-versa, these costs are not deductible. If you spent the entire journey duration on the phone discussing business, you could not claim benefits for the cost.
If you require a parking permit, you cannot claim tax rewards, except for exceptional circumstances requiring a tax professional’s help.
There are always exceptions, so you can claim rewards on commuting cost under the following conditions:
Home office as a primary business location
Your travel cost is claimable if you move from your home to the office and the house is your primary business location. You must provide documentation to prove your claims, including details of companies you’re involved with, for clarity.
The paperwork must clearly state that the purpose is for admin or management business purposes. (source)
Moving between workplaces
Engineers can claim benefits on travel costs to move between two job sites because of their work relations. For instance, if you drive between your shifts jobs, your expenses are tax-deductible.
Temporary distant worksite
Are you traveling for a temporary job while the worksite is out of your city? You can claim tax deductions. The IRS included this exception to prevent business owners from moving permanent job sites for a temporary job.
Working From Home Tax Deductions
A lot more people are working from home this year because of the global pandemic.
People spend a lot on supplies, internet connections, or desks to make their home a conducive working environment. The question on everyone’s lips is, “can my expenses can get tax deductions because I work from home.”
You cannot claim the benefit if you’re under a working contract working for a firm and receiving paychecks.
The IRS stated that if you work full-time for another company, your expenses are not tax-deductible. Shift workers using the itemized strategy on their federal returns can claim benefits on unpaid work expenses before the 2017 tax overhaul eradicated the option. (source)
However, you can get tax breaks working from home if your diverse reductions surpass 2% of your modified gross income. You can also benefit from amounts over the 2% threshold.
The case is different for California, Alabama, Pennsylvania, Minnesota, Hawaii, and New York. Their residents can claim unreimbursed work-related expenses on their tax returns.
The rules for home tax deductions are different in each state, so go through the regulations for your unpaid expenses entitlements. It is advisable to ask if the business owner will reimburse you because tax only reduces a fraction of your tax bill.
You may have to persuade your employer a little because of the percentage of employers supporting remote workers with financial benefits such as allowances.
Self-employed shift workers are the eligible people to benefit from home tax deductions. It means you have to run the business as independent contractors working from the comfort of your home. (source)
Self-employed workers can only claim a deduction for the space used for business purposes. The home must also be the primary business location and cannot claim benefits on items used for personal purposes. (source)
Keep Reading:
In Summary: Is A Lunch Box Tax Deductible? 2021 Shift Workers Tax Guide
I hope you’re now feeling a little more empowered to take control of your tax return this year! Even if it simply gave you a few ideas for next year and reminded you about keeping receipts and documenting everything – I’m happy!
My fingers are crossed for a good refund!
Disclosure: This page may contain affiliate links, meaning we receive a commission if you decide to make a purchase through our links, but this is at no additional cost to you. Please read our disclosure and privacy statement for more info.
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