In recent years, entrepreneurs, remote workers, and freelancers worldwide have started flocking to shared workspaces. Coworking has provided several benefits to individuals and companies, ranging from flexibility and productivity to networking and amenities. And to add to the list of benefits, you even have the advantage of tax deduction! Paying for a coworking space like Startuptive comes with several tax benefits to unburden you from some of your expenses.

So if you are new to shared workspaces, here’s everything you need to know about coworking space tax deduction.

But first, let’s address the question of the hour – Are coworking office spaces tax deductible?

It’s the answer you have been looking for. Yes, coworking spaces are tax-deductible! The cost of using a coworking office space counts as renting an office and includes the following items:-

• Your regular coworking membership fee
• Rental fee of the conference rooms and meeting rooms
• Cost of networking events
• Printing fees
• Business mailbox
• Live answering services

Tax Benefits of Coworking Spaces:

There are many tax benefits of coworking spaces. Here are some:

Deduction for your business expenses:

You can deduct your business expenses, such as co-working space rental, from your taxes. This can help you save money on your taxes. It will also help you reduce your taxable income, which can lower your tax bill.

Deduction for home office:

If you use a portion of your home for business, you may be able to deduct the expenses associated with that space from your taxes. This can include a portion of your rent or mortgage, utilities, and insurance.

Deduction for equipment and supplies:

You can deduct the cost of any equipment or supplies you use for your business, such as computers, printers, and office furniture. This can help you save money on your taxes.

Deduction for travel:

If you travel for business, you may be able to deduct the cost of your travel expenses from your taxes. This can include the cost of airfare, hotel accommodations, and rental cars.

There are many other tax benefits of coworking spaces. These are just a few of the most common ones. Be sure to talk to your accountant or tax advisor to see if you qualify for any of these deductions.

Is Food a Tax-Deductible Item in Coworking?

To answer this question, you need to understand the nature of the purchase. For the costs of your daily meals at the office, the answer is no. Even if you eat food at your coworking space during work hours, it counts as a personal expense and is therefore not a tax-deductible item.

However, if you spend money on food for business meetings at the coworking office space, you have the right to claim a specific percentage of the total expenditure.

Is the cost of commuting tax-deductible?

Rules for coworking space tax deduction on commutes are pretty tricky. If you travel to a particular location of work or coworking space regularly, then the expenses are not tax-deductible. However, if you primarily work from home and travel to coworking spaces for meetings, only as and when needed, then the cost of travel becomes a tax-deductible item.

The Difference in Tax-Deduction for Coworking Spaces and Home Office

The cost and expenses of coworking or private offices depend on several factors, including your type of arrangement and the location. Having a dedicated desk will usually cost you more than a lounge seat or a virtual office. The perks offered by the coworking spaces also significantly affect its prices. While comparing the costs of coworking spaces with home offices, the latter will seem like a cheaper option. However, it’s critical to note here that even home offices have the following costs:-

• Energy bills, which may double up during winters
• Expenses involved in assembling home-office equipment, including desks, chairs, laptops, lighting, and more
• High-speed internet connections to avoid video lag

Tax benefits for coworking and home offices are calculated differently. Freelancers who work from home can get a percentage of their rent deducted based on the square feet they use for their office set up. However, when a freelancer does not have a dedicated work office and uses a living room or kitchen table, tax deduction calculation becomes quite difficult. On the other hand, coworking spaces face no such issues in tax calculation. However, along with the rent receipt, ensure having a receipt of all other business expenses incurred at coworking spaces.

Still Confused About Coworking?

Coworking offers financial benefits in two ways. First, by paying money only for the time coworking spaces are used. Second, by later deducting your expenses during the tax season. So if you are still confused, think again. Do you really want to let go of all the advantages it offers? To reap all the benefits of a shared office spaces, explore your options and choose the coworking space or shared office that fulfills your business needs and requirements. Check out Startuptive if you happen to be in Toronto Area!