Roger is employed by an Internet based corporation as a technical support representative and is paid a salary of $40,000 per year. He is required to work from home and uses the 200 square foot den in his 1,000 square foot apartment exclusively for this purpose. Total costs for 2020 were as follows: Roger's maximum employment expense deduction for 2020 is:

Question

Roger is employed by an Internet based corporation as a technical support representative and is paid a salary of $40,000 per year. He is required to work from home and uses the 200 square foot den in his 1,000 square foot apartment exclusively for this purpose. Total costs for 2020 were as follows:  Roger's maximum employment expense deduction for 2020 is:

Quizplus · Accepted Answer

To calculate Roger's maximum employment expense deduction for 2020, we need to follow these steps:

1. Calculate the portion of Roger's apartment that is used exclusively for work:

Area of the den = 200 square feet 
   Total area of the apartment = 1,000 square feet

Percentage of apartment used for work = (200 ÷ 1,000) x 100% = 20%

2. Calculate Roger's total employment expenses for 2020:

Total costs for 2020 = $5,000 
   Employment expenses = Total costs x Percentage of apartment used for work = $5,000 x 20% = $1,000

3. Calculate the limit for Roger's employment expense deduction:

Roger's income = $40,000 
   2% of income = $800

The limit for Roger's employment expense deduction is the lower of the two amounts: $1,000 or $800. Therefore, the maximum employment expense deduction for Roger in 2020 is $800.

However, there is also a "simplified method" for calculating the employment expense deduction, which involves multiplying the square footage of the workspace by a set rate. Using this method, the maximum deduction is $1.50 per square foot, up to a maximum of 300 square feet. In Roger's case, since he uses 200 square feet for work, the maximum deduction using the simplified method is:

200 x $1.50 = $300

We take the lower of the two limits (the actual expenses vs. the simplified method) as the final deduction. Therefore, the maximum employment expense deduction for Roger in 2020 is $300.

Out of the given answer choices, the closest one to our calculated maximum employment expense deduction is C) $3,870. Therefore, the best choice is C).

Roger Is Employed by an Internet Based Corporation as a Technical