People often think about how much they'll save working from home but not the expenses of doing so

Woman Working from Home on Bed / Want to Work from Home? Think about These Hidden Costs Before You Start
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February 23, 2017

Whether it's telecommuting or freelancing, many people dream of having the opportunity to work from home. They can't wait to save on commutes and set their own schedule. However, there are costs associated with working from home that people often fail to take into account, expenses that come back to haunt them.

Do you want to work from home? Consider these hidden costs when making your decision:

  1. Technology
  2. Many people use their personal smartphones, laptops, and tablets for the occasional business purpose, such as checking email at night. When you work from home, though, these devices are the essential tools you need to work and communicate with your supervisors, coworkers, and clients, so they need to be in good working order.

    Devices that are slow and/or crash-prone will have a serious impact on your productivity. If yours is old and slow, you will probably want to replace it before you start working from home.

    Keeping your technology up-to-date can be a huge cost of working from home. However, you may be able to get significant tax deductions for these purchases if you are a freelancer or independent contractor. Check with a tax professional to see if you qualify.

    Of course, taking care of the devices you already own will help you avoid the expense of replacing them. Keep them free from crumbs, viruses, and malware to keep them going as long as possible.

  3. High-Speed Internet and Other Utilities
  4. Cranky devices are not the only causes of low productivity when working from home. Sometimes your internet connection is too slow.

    Unfortunately, both the office and work-from-home environments are too fast-paced today for workers to get by with a low-speed internet connection.

    Fortunately, as with technology upgrades, you may be able to deduct part of the cost of buying high-speed internet on your taxes. Keep records of how frequently you use your home internet connection for business use and for personal use, and share the records with your tax advisor.

    Do you have a room in your house dedicated solely as a home office? You can probably get a deduction for that too. Unfortunately, your utility bills are going to rise regardless, since you'll now be using parts of the house that would normally not be used when you're at work, such as the kitchen and bathroom. Make sure to budget accordingly.

  5. Office Supplies
  6. Although we are living our lives more and more digitally, we still need basic office supplies when working from home.

    Home-based employees may go through items like notebooks and sticky notes very fast. They may also need to buy software or a better office chair.

    Again, check with a tax professional to see if you can get a deduction for buying office supplies.

  7. Food
  8. This is one that people usually place firmly in the "Savings" category when comparing how much they'll save to how much they'll spend working from home. Instead of being tempted to go out to eat, you can simply walk over to your pantry or fridge.

    The problem? Something has to be in the pantry or fridge.

    If you don't keep a close eye on your habits when grocery shopping and meal planning, you'll likely end up ordering take-out or going to a nearby café or fast-food restaurant for lunch, spending the money you expected to save on food.

    If you work from home, plan your meals and leftovers exactly how you used to plan to take them to work. The goal is to always have food when you need it without having to use work hours for cooking and cleanup.

  9. Health and Exercise
  10. Telecommuters often have an advantage over freelancers and independent contractors when it comes to freelancing. They're still employees of their company, so they may still have access to company benefits such as health insurance and discounted gym memberships. Freelancers and independent contractors have to pay for these things out of their own pockets.

    Insurance, gym memberships, yoga classes, fitbits, running shoes, vacations—these all cost money, and people working from home need to work them into their budgets if they want to use them.

  11. Travel
  12. Want to attend a conference? Visit the office? Meet a client? These trips add up, and that means money out of your pocket.

    You'll need transportation (car/taxi/plane/train/bus). If you drive yourself, you'll need gas and will probably also have to pay to park. If you're meeting a client for coffee or lunch, you'll have to pay for your (and possibly their) order.

    You might be able to deduct these expenses too, however, so check with your tax advisor.

    Keep in mind also that travel and meetings also eat up work hours, notwithstanding phone calls and emails and other work done while on the go. If you're a salaried employee working from home, you get paid for that time. If you're hourly or a freelancer, you probably don't, and you have to figure out how to make up the costs.

  13. Social Activities
  14. If you work at an office, you probably feel relaxed when you get home from work. If you work from home, you might feel like you won't be able to relax unless you get out of the house.

    Unfortunately, getting out of the house often involves spending money, whether it means going out with friends, taking an evening class, or just getting a cup of coffee.

    Know your habits and adjust your budget accordingly. Try to find ways of getting out of the house that don't involve spending money, like going for a walk around your neighborhood.

  15. Professional Development
  16. Many activities fall under the umbrella of professional development, from networking events to classes for professional certifications. They allow you to meet new people while also building your skill set.

    Once again, however, professional development costs money.

    If you're an employee, you might get a bit of help from your employer, but you'll still probably end up footing the bill for the cost of the course, the transportation to get there, the coffee or meal with the folks you met after the course ends, etc.

    Professional development is important, so you don't want to avoid the associated costs completely. But make sure that they're worth it before you spend.

    Research the event before you sign up. Will you learn a new skill or build on one you already have? Who else will be there, and are they at the same career level as you? Are there any reviews or video or audio recordings of previous events available?

    Before you pay, make sure the event is worth your time and money.

  17. Double Taxation
  18. This cost depends on where you live and where the company you work for is based. Here's the nitty-gritty:

    Some states require everyone who works for a company in that state to pay income tax on the money they earn while working for that company—even if they don't live in that state and even on days when they are working for the company in another state.

    As if that weren't bad enough, some states require those same employees to pay income tax on the money they earn while they are physically working in their state—even if the work is for an out-of-state company.

    Basically, for certain states, if you live in State X and Work in State Y even some of the time, the money you earn working from home will be subject to income taxes for both State X and State Y. You get taxed twice.

    North Carolina is one of these states. According to the North Carolina Department of Revenue, if you do not live in N.C. but you do earn money from "a business, trade, profession, or occupation carried on" in N.C., you have to file a tax return in N.C.

    If you aren't sure about the requirements of the state(s) where you live and work, check with a tax professional or the state's revenue department.

References: The Penny Hoarder, Business Insider, The Huffington Post, N.C. Department of Revenue