IRS “convenience of the employer” test when employee lives far from the office
"The decision whether this test is or is not met seems to be highly dependent on the specific situation of the employer and the employee.  I think that you won't find a lot of general references meeting your needs. There is such a thing as a ""private ruling letter,"" where individuals provide specific information about their situation and request the IRS to rule in advance on how the situation falls with respect to the tax law.  I don't know a lot about that process or what you need to do to qualify to get a private ruling.  I do know that anonymized versions of at least some of the rulings are published.  You might look for such rulings that are close to your situation. I did a quick search and found two that are somewhat related: As regards your situation, my (non-expert) understanding is that you will not pass in this case unless either (a) the employer specifies that you must live on the West Coast or you'll be fired, (b) the employer would refuse to provide space for you if you moved to Boston (or another company location), or (c) you can show that you could not possibly do your job out of Boston.  For (c), that might mean, for example, you need to make visits to client locations in SF on short-notice to meet business requirements.  If you are only physically needed in SF occasionally and with ""reasonable"" notice, I don't think you could make it under (c), although if the employer doesn't want to pay travel costs, then you might still make it under (a) in this case." "I'm not a tax professional, but as I understand it, you are not expected to commute from San Francisco to Boston.  :) If your employer has not provided you with an external office, then yes, you have very likely met the ""convenience of the employer"" test. However, to take the home office deduction, there are many requirements that have to be met. You can read more at the Nolo article Can You Deduct Your Home Office When You're an Employee? (Thanks, keshlam) The home office deduction has many nuances and is enough of an IRS red flag that you would be well-advised to talk to an accountant about it.  You need to be able to show that it is exclusively and necessarily used for your job. Another thing to remember: as an employee, the home office deduction, if you take it, will be deducted on Schedule A, line 21 (unreimbursed employee expenses), among other Miscellaneous Deductions.  Deductions in this section need to exceed 2% of your adjusted gross income before you can start to deduct.  So it will not be worth it to pursue the deduction if your income is too high, or your housing expenses are too low, or your office is too small compared to the rest of your house, or you don't itemize deductions." If your employer does not provide you with a place to work but nevertheless expects you to get work done, then having a place to work is a condition of employment.
"From the IRS page on Estimated Taxes (emphasis added): Taxes must be paid as you earn or receive income during the year, either through withholding or estimated tax payments. If the amount of income tax withheld from your salary or pension is not enough, or if you receive income such as interest, dividends, alimony, self-employment income, capital gains, prizes and awards, you may have to make estimated tax payments. If you are in business for yourself, you generally need to make estimated tax payments. Estimated tax is used to pay not only income tax, but other taxes such as self-employment tax and alternative minimum tax. I think that is crystal clear that you're paying income tax as well as self-employment tax. To expand a bit, you seem to be confusing self-employment tax and estimated tax, which are not only two different things, but two different kinds of things.  One is a tax, and the other is just a means of paying your taxes. ""Self-employment tax"" refers to the Social Security and Medicare taxes that you must pay on your self-employment income.  This is an actual tax that you owe.  If you receive a W-2, half of it is ""invisibly"" paid by your employer, and half of it is paid by you in the form of visible deductions on your pay stub.  If you're self-employed, you have to pay all of it explicitly. ""Estimated tax"" does not refer to any actual tax levied on anyone.  A more pedantically correct phrasing would be ""estimated tax payment"".  Estimated taxes are just payments that you make to the IRS to pay tax you expect to owe.  Whether you have to make such payments depends on how much tax you owe and whether you've paid it by other means.  You may need to pay estimated tax even if you're not self-employed, although this would be unusual.  (It could happen, for instance, if you realized large capital gains over the year.)  You also may be self-employed but not need to pay estimated tax (if, for instance, you also have a W-2 job and you reduce your withholding allowances to have extra tax withheld). That said, if you earn significant income from self-employment, you'll likely have to make estimated tax payments.  These are prepayments of the income tax and Social Security/Medicare taxes you accrue based on your self-employment income. As Pete B. mentioned in his answer, a possible reason that your estiamtes are low is because some taxes have already been withheld from the paychecks you received so far during the year (while you were an employee).  These represent tax payments you've already made; you don't need to pay that money a second time, but you may need to make estimated tax payments for your income going forward." "Am I on crack, or do the perceived tax savings via S-Corp   distributions really not matter at a certain level of business income? You're not on crack. Generally, if all the income is generated by your own personal services - this is the outcome. The benefit of S-Corp is when you have employees who generate your income, and you distribute to yourself profits that come out of other's personal services. In this case your distributions are exempt from FICA since it is not in fact a self-employment income. You'd still have to pay yourself a reasonable salary for your position (as a manager/officer), but it wouldn't have to cover all of the available profits. So if the IRS takes a position against you it would be that your salary should be to include the whole profits, since it is the compensation to you for the personal services that produced the income to the corporation (you). In many cases they might agree that a salary at the SS maximum limit would be reasonable - but that's only a speculation of mine. In that case you might gain some portion of the medicare tax (with the recent law changes at the levels you're talking about you'll pay some medicare anyway). There are a lot of accountants who take more aggressive position saying that not all of the distributions are liable for SE taxes, even if you're the sole employee of the corporation. These cases often end up in the Tax Court, and whatever the outcome, your legal fees become higher than the FICA savings. What is probably missing in your picture is the SS limit of (currently $112K) above which you don't pay social security tax, so whether you get it as a salary or as a distribution - that limit is the same. That is why you don't see a significant difference. I know there are a lot of accountants who'd disagree, but I would argue that for a sole employee of your company, S-Corp doesn't provide significant benefits over the disregarded LLC taxation, but has some additional overhead that adds to your expenses. Here's a link to a lawyer's blog where he suggests (and says many accountants follow) 60/40 division between salary and distributions. I.e.: his take, similarly to mine, is that most of the earnings have to be treated as salary. In your case, when the total is about 300K - you indeed will not get any FICA savings with such a division other than some of the medicare.  Unusually low wages when compared to distributions can draw unwanted   IRS scrutiny and an audit. An unfavorable audit will likely result in   some portion of the distributions being reclassified as earned income   for federal income tax purposes, which results in a deficiency   assessment (i.e., a tax bill), interest on those unpaid taxes, and IRS   penalties. The article also talks about the Watson case (one of the Tax Court cases I referred to), which can be used as the guidelines for determining the ""reasonable"" compensation. Talk to your tax adviser. I'm neither a tax adviser nor a tax professional. For a tax advice contact a CPA/EA licensed in your state. This is not a tax advice, just my personal opinion." Most companies that have employee discounts have policies to prevent exactly this. Sometimes they will say that you can only use the company discount for products that you intend to use yourself, they'll specifically ban buying things for friends. Of course enforcing such a rule can be difficult, but a car is a big enough purchase that if they have such a rule, they're likely to pay attention. Other times they try to discourage letting friends use your discount by having rules that make it awkward. Like I used to work for a furniture company that said you had to pick up the furniture personally at the office where you worked. So if you wanted to buy a sofa for your brother who lived in another state, you'd have to pay to ship it, and probably wipe out most of the savings from the employee discount. My daughter's employer says you have to show your employee ID when you make the purchase and then they deduct it from your next paycheck. So you'd have to get your friend to pay you back, maybe loan them your ID if they want to pick it out, which would get awkward. Etc. Assuming the company doesn't care if you buy with an employee discount and re-sell, or their rules are lax enough that you can get away with it, I'm not aware of any law that would stop you. In general there aren't any laws against you re-selling things you've bought. People have garage sales and sell used cars and the like all the time. (There are specific exceptions. Like you can't re-sell prescription drugs.) "Depends. If you can choose where to relocate to, then I second the ""no income tax"" states. But even of these chose wisely, some have no income taxes at all, others have taxes on some kinds of income. Some don't have neither individual nor corporate taxes, some tax businesses in some ways. Some compensate with higher property taxes, others compensate with higher sales taxes. On the other hand, you might prefer states with income taxes but no sales taxes. It can happen if your current income is going to be low, but you'll be spending your savings. If you don't have a choice (for example, your employer wants you to move closer to their office), then you're more limited. Still, you can use the tax break on moving expenses (read the fine print, there are certain employment requirements), and play with the state taxes (if you're moving to a state with less/no taxes - move earlier, if its the other way - move later). Check out for cities that have income taxes. In some states it cannot happen by law (for example, in California only the state is allowed to collect income taxes), in others it is very common (Ohio comes to mind). Many things to consider in New York. New York City has its own income tax (as well as Yonkers, as far as I remember these are the only ones in the State of New York). So if you want to save on taxes in NYS but live close to the city, consider White Plains etc. If you work in NYC its moot, you're going to pay city taxes anyway. That is also true if you live in NJ but work in the city, so tax-wise it may be more efficient not to live across state lines from your place of work." Tax regulations vary from country to country - some permitting more deductions, some less - but here are a few guidelines. As regards the home-office: As regards the deductions: Think of it like this: in order to have space for a home-office you needed a bigger home.  That leads to increased rates, heating, insurance and so on.  Many tax regulators recognise that these are genuine expenses.  The alternative is to rent a separate office and incur greater expenses, leading to increased deductions and less overall tax paid (which won't finance the deficit). The usual test for deductions is: was the expense legitimately incurred in the pursuit of revenue?  The flexibility permitted will vary by tax authority but you can frequently deduct more than you expected. Another thing to consider, however, is the deductibility of business expenses.  Let's assume that the employer can legitimately hire you as a 1099 contractor.  (Would you be able to telecommute? Would you have a high degree of control over when you worked and when you didn't?  These factors also affect whether you're a true independent 1099 contractor or not.)  As a legit 1099 contractor, you're able to deduct certain business expenses directly from your income. (You can find a list of the rules at irs.gov.)  As a W2 employee, by contrast, can deduct only business expenses that exceed 2% of the your AGI (adjusted gross income).  So, you also have to consider your personal circumstances in making the calculus and comparing whether a legitimate 1099 contractor job is or is not good for you.  It's not just a comparison of what they'd pay W2 employees versus what they'd pay 1099 contractors. "New York State is one of a few states that will go after telecommuter taxes (such that some people may end up paying double tax even if they don't live in NY).  There are a few ways that you can avoid this. If you NEVER come to NY for work, and your employer can stipulate that your position is only available to be filled remotely, you will likely be covered. But there are a myriad of factors relating to this such as whether the employer reimburses you for your home office and whether you keep ""business records"" at your office.  Provided you can easily document the the factors in TSB-M-06(5)I, you shouldn't have to pay NYS taxes.  (source: I've worked with a NYS tax attorney as an employer to deal with this exact scenario)." The most important thing to do when moving is to change your address with the post office. This will forward most mail for a year, and even automatically send change of address notices to many businesses that send mail to you. If you do this, and the IRS needs to send you something over the next year, you'll get it.  The IRS does have a procedure for changing your address, and you would want to do this if you are expecting something from the IRS and are unable to do a change of address with the post office for some reason. But if you do forward your mail and you aren't expecting a refund check, I don't think it is necessary. The IRS will get your new address when you file your return next year.