Explainer: How to claim income tax deductions on work-from-home expenses

SINGAPORE — With telecommuting set to be the new norm, workers have the option of claiming tax deductions against their employment income for expenses incurred while working from home, such as for electricity and telephone bills.

The Inland Revenue Authority of Singapore (IRAS) said in a statement on Tuesday (June 2) that such tax deductions will be allowable for expenses that are “incurred wholly and exclusively in the production of employment income”.

More people started to work from home since the circuit breaker started on April 7. And even as Singapore embarked on phase one of reopening the economy on Tuesday, the Ministry of Manpower has urged firms to treat working from home as the “default mode of working”. 

So how should telecommuters determine what costs are “exclusively” borne from working from home, and how would one go about calculating these claims? 

TODAY answers these questions. 

HOW WILL THE CLAIMS BE CALCULATED?

Iras noted that employees may find it difficult to calculate the exact amount of additional expenses that have been incurred while telecommuting, but gave a few examples of how they can go about tallying their claims.

For electricity and telephone bills, for example, the employee can compare their bills from before they started working from home and after.

For instance, if the electricity bill was S$50 in the month before the employee worked from home and then S$60 in the month after, then the difference of S$10 can be claimed. 

For WiFi expenses, it can be claimed if the WiFi router was set up only for work purposes. The employee can claim the monthly subscription fee as a deduction. However, one-time charges such as installation or connection fees cannot be claimed, as they are “capital in nature”, Iras said. 

Those who had already set up WiFi routers prior to working from home will not be able to make claims. 

WHEN CAN EMPLOYEES MAKE THESE CLAIMS? 

Iras said that employees who have incurred work-from-home expenses this year may claim for a deduction against their employment income during next year’s income tax filing.  

Iras advised workers who wish to do this to keep proper records on expenses incurred. This is so that they will be able to reasonably identify the expenses incurred for telecommuting purposes, when audited by the authority. 

WHAT IF I HAVE MORE THAN ONE PERSON IN THE HOUSEHOLD WORKING FROM HOME? 

If there is more than one person working from home under the same roof, Iras said it is prepared to accept an “equal apportionment basis among the working individuals in the same household”. 

This means if there are two telecommuting members in a household that has a S$10 difference in utility costs, then each member can claim S$5 in tax deductions. 

WHAT IF EMPLOYERS HAVE ALREADY REIMBURSED THE WORKER?

If an employer has already reimbursed the worker for work-from-home charges, then the worker will not be able to claim tax deductions.