|
|
|
| Issue: |
Your company has decided to implement a telecommuting policy that will allow employees to work from home. Because most of the telecommuters’ work will be computer-based, your company is considering providing computers for home use rather than requiring employees to purchase computers themselves. What are the advantages and disadvantages of providing computers? |
 |
|
|
Answer: |
There are several advantages and disadvantages of providing computers for employees’ home use. The main tax-related advantage is that the employer is entitled to business deductions for the cost of providing computers for an employee's home use when such use is business related. The deductions are available if the working condition fringe benefit rules are satisfied.
Non-tax advantages. The non-tax advantages include:
- Employees who are familiar and comfortable with computer equipment;
- Increased productivity, as employees are able to work at home and become more skilled in using the equipment on the job;
- Flexibility in choosing the employees to whom home computers will be provided; and
- Where an online network has been established, the ability to enlist the services of employees at home when problems arise.
Disadvantages. The major disadvantages to an employer of employer-provided computers for an employee's home use include:
- Loss of business deductions and credits (depreciation deductions are limited and investment tax credits are denied) if employee use of the computer is less than 50% for “qualified business use” or because of employee failure to substantiate business use;
- Increased administrative costs in order to keep track of employee-use records and to compute the value of an employee's personal use of the computer; and
- Possible loss of "computer knowledgeable" employees to other employers.
Source: CCH Fringe Benefits Tax Guide |
|
|
