Are You a Remote Designer? Here's All You Need to Know About Taxes

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June 29, 2021 Business

Over the last year, more and more people have started to live life as remote workers. This is due to the pandemic and the fact that for businesses to resume, they’ll need to adapt to a work from home environment for the safety of their workers and those around them. It was tough adjusting at first but now, remote working has become a common way of life.

What is remote working? It’s basically a practice where employees get to work from home. It has many benefits including having more time to themselves, working in a more comfortable environment, and the fact that they no longer need to travel from home to the office.

Almost every job and industry can be done from home now. Teaching, customer service, IT, and yes, even designing. If you are a remote designer, you’ve probably adjusted to life as a remote worker by now but there might be some things that you’ve still yet to understand about the lifestyle.

One of the easiest adjustments you have to make when shifting to a work from home set up as a designer is the exact practice of working itself. All you need is a computer with the right software, a good and quiet room, and you’ll be set up immediately.

What’s tough though is managing taxes. Many would argue that remote workers should be taxed the same way as regular employees but in reality, there are some key differences between how both types of workers are taxed. Here’s everything you need to know about taxes as a remote designer.

Paying Local Tax While Exploring

As a remote worker, you have more time on your hands now. You can even head to the Bahamas for a month or two and then work from there given that you really don’t have to head back to the office. One thing that might worry you while doing this though are local taxes.

If you aren’t planning to stay in another country for months, then you are going to be okay. You wouldn’t need to file for local taxes.

However, if you plan on staying for more than six months, you might be obligated to file your taxes locally even if the company you work for is off shore.

This really depends, however. Beach destinations like the Cayman Islands, Costa Rica and Antigua have a grace period of 6-months to 2-years before you’re required to pay local taxes. If you’re a designer, trips to destinations like these are very necessary to draw inspiration from.

Keep in mind that while you don’t have to pay local tax, you’ll still have to pay tax back in the US.

If you really are hoping to travel, it’s best to plan ahead. Plan so that you know that you aren’t required to visit the office anytime soon. Plan so that you can avoid having to pay for taxes twice. Once you’ve sorted things out, it will be a lot easier for you to be enjoying work while vacationing elsewhere.

Tax Resolutions Still Apply

The truth is that remote workers have a lot less spending to worry about. They don’t have to think about gas fees or commuting fees. The food they have at home is all they’ll need. They even have more opportunities to find part time jobs if they are working from home.

Despite the clear financial advantages, tax resolutions still apply to remote workers. As per finance professionals from Tax Shark Inc., tax resolutions are different from tax reliefs. Basically, tax resolutions are about solving specific problems related to tax. Specialists basically assist you with matters that need extensive knowledge of tax laws and IRS procedures.

If you have any problems with your taxes as a remote worker, then don’t stress too much about it. Both tax relief and tax resolutions will still apply to you. The government is more lenient on remote workers and they are treated pretty much the same as any regular workers out there.

Understandably, there will be times when you are going to struggle with your taxes. Cases like these are more likely now because of the pandemic. Hopefully, you don’t have to go through these problems but it’s worth knowing that opportunities for tax resolutions are still open for you.

You Are Taxed Like Any Other Worker

A common misconception is that if you are a remote worker, you will be taxed differently. That can’t be further from the truth. In reality, remote workers are taxed the same as any regular worker. There are no incentives or deductibles that will result in higher or lower taxes for any of the two.

On the other hand, since you’ll be spending less on food and transportation, you’ll still be spending less than a regular worker. Still, it’s worth knowing what your taxes are going to be like once tax filing arrives.

Home Office Expenses Are No Longer Tax Deductible

Are you looking to get a new drawing tablet or a new computer to help you design better? These can be very heavy expenses and they can become even heavier once tax arrives. The bad news is that work from home employees can no longer make their home office expenses tax deductible.

It used to be that remote workers can deduct home office expenses on their tax filings. However, since the pandemic began, the influx of remote workers might’ve been tough on the government so they had to change the tax laws regarding them.

This was changed with form 8829, Expenses for Business Use In Your Home. The deductibles only apply to people who are self-employed. As such, we suggest asking your company for the appropriate equipment if you want to cut the costs on new devices.

These are the important things you need to know when it comes to taxes as a remote designer. May this serve as a good guide on what you need to expect and what you shouldn’t when tax day arrives. As a remote worker, you still have your tax obligations after all.