There’s no denying it, IT professionals are the unseen frontline heroes of a business. Whether you’re a developer, a support guru or a security ninja, it’s never an easy job to keep services and people working, 24/7. What is surprising is the number of available tax deductions for IT professionals. So, let’s get our IT tax smarts on and run through the most common expenses IT worker could claim on their next tax return!
Tax deductions for IT professionals
The 3 most common work-related tax deductions for IT professionals are:
1. IT equipment costs
The most common IT tax deductions are tools of the trade. Any out of pocket equipment you purchase to help you do your job can usually be claimed. This includes: keyboards and mice, monitors, backup drives, office desks and software.
Other common IT equipment costs are for larger purchases like laptops and computers. As the cost of these items is generally above $300, they need to be claimed as a depreciating asset rather than in full.
What is depreciation?
Depreciation is the amount an item, such as a laptop, drops in value over time. You use the number of years the ATO considers an item to be of use (it’s ‘effective life’) to claim the purchase price back over time (rather than all at once). Confusing? Don’t worry, your tax agent will work out the depreciation of assets for you.
- Read more about claiming computers or a laptop as a tax deduction for IT professionals.
2. Travel expenses for IT professionals
If you work in IT, often you’ll need to travel between sites, whether that’s across the same city, out to remote areas or interstate. These travel expenses can quickly mount up, so make sure you include any out of pocket expenses on your tax return.
Travel expenses include: car hire expenses, public transport, flights and accommodation.
- For more information on claiming travel expenses as an IT worker, read our post: Work related travel expenses – what can you claim?
3. How does working from home affect IT taxes?
These days, many IT professionals work at home wither full time or at least a few days a week. So, what does that mean as far as your tax refund is concerned? The cost of power, internet and everything else quickly mounts up, so can you claim tax deductions for them as an IT professional?
The simple answer is yes. There are two different ways you can claim the costs of working from home as tax deductible expenses:
1. Actual Cost
You can use what the ATO calls the Actual Cost method. Using this method, you claim the actual cost of everything, such as the work related percentage of power bills, internet, phone etc. separately.
2. Fixed Rate
Secondly, you can choose the recently amended Fixed Rate method. To use this method, you claim an amount per hour for every hour your worked from home throughout the year. This method includes internet, power, mobile phone and other costs.
It’s important to understand the difference between these two methods of claiming your work from home expenses. Don’t worry if you’re not sure, the Etax tax return has in built smarts, which analyses the information you enter about your work from home expenses and automatically selects the method which will get you the best refund. You can also ask your Etax Accountant to help explain which method is best for your circumstances.
Other work related tax deductions for IT professionals:
Education Expenses
Personal development is crucial in IT roles. Even if that is simply staying up to date with changes in your industry, security or the platforms and software you use. Attending conferences, training seminars and workshops will improve your efficiency and broaden your knowledge, whatever area of IT you’re in.
The good news is, if you paid for this personal development yourself and it was directly related to your current role (not to help you get a different role), you can generally claim your out of pocket costs. These include course or seminar fees, travel to and from the venue, and any materials, such as books, you had to buy.
Find out more about education expenses and why upskilling can benefit you in far more ways than just your pocket at tax time:
Uniform and laundry expenses
If you work in the type of role where you meet customers on behalf of the company you work for, there is something else you may be able to claim as a work related tax deduction. Do you need to wear a uniform or a shirt with the company logo on it? If you do then don’t forget to claim the cost of purchasing, washing and mending these on your tax return.
Car expenses
If you use your car for any trips relating to your job. For instance, between clients and work sites, or to attend meetings, you can also include car expenses on your tax return. Short trips quickly add up and with petrol costs as they are, it’s definitely worth getting some of that cash back. Just remember that you usually can’t claim trips to and from work. The exception to this rule is, if you need to transport heavy items that you can’t leave at your at work.
Other common expenses to help boost your IT tax refund:
- Charity donations: Claim your donations to registered charities on your tax return.
- Income Protection: Do you have income protection outside of your superannuation fund?
- Personal Superannuation Payments: How to claim a deduction for your additional Super payments.
And finally: A few tax tips for IT professionals
Read on to boost your tax deductions and get a better tax refund:
Record Keeping
Remember, if you don’t have a receipt or other records you generally can’t claim it. This extends to work from home where if you don’t have a record of the hours you worked from home, you can’t claim them.
- Luckily Etax makes record keeping easy: Download an expense tracker or a diary here
Keep it real
If you didn’t pay for it out of your own pocket, don’t claim it. Likewise, don’t over inflate claims or exclude income from your tax return. If you did a bit of work on the side, it’s likely that income will show up somewhere in the ATO’s data matching efforts. Make sure you include ALL income, however small!
Ask for help
Like most people, working out what tax deductions IT professionals can and can’t claim is hard. But don’t worry, with Etax on your side, you know your tax return is correct. You can even live chat and ask questions as you go. When you’re done, our accountants get to work on reviewing and checking everything, before it’s lodged to the ATO.
The result? The confidence that your tax return is accurate AND you’ve got the best possible refund! What’s not to love?
