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Cradle-to-Grave Guide to Common Tax Credits and Deductions

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It’s true what they say — nothing in life is guaranteed except death and taxes. However, there are a number of tax deductions and credits you can take advantage of throughout your lifetime to free up extra cash.

We outlined the most common deductions and credits you may be able to qualify for once you reach life’s biggest milestones, like completing higher education, getting married or buying a home.

Tax credits vs. tax deductions

Before we dive in, however, it’s crucial for you to understand the difference between tax credits and tax deductions:

  • A tax credit reduces the amount of tax you owe
  • A tax deduction reduces your taxable income

Tax credits have a much greater impact on reducing your tax load since they are deducted directly off your tax bill. For example, a $2,000 tax credit will result in you owing $2,000 less in taxes this year.

Tax deductions, however, can still help you save money in several ways, including lowering your taxable income so more of your income is taxed at a lower rate.

Your cradle-to-grave tax guide

While you should speak to an accountant to determine which overall tax strategy will work best for your income and circumstances, one of the best ways to save is by making sure you take all the tax deductions and credits that are available to you.

Your School Years

American opportunity tax credit (AOTC)

The American Opportunity Tax Credit (AOTC) is worth up to $2,500 per year and can be used for qualified education expenses incurred during the first four years of college by an eligible student. This credit covers the first $2,000 in qualified education expenses for each eligible student, along with 25% of the next $2,000 you paid ($500) for the same student within a calendar year. If the credit reduces your tax bill to zero, you can have up to 40% of the remaining amount (up to $1,000) refunded to you.

To qualify for the full credit, you must have a MAGI (modified adjusted gross income) of $80,000 or less for singles or $160,000 or less if you’re married filing jointly. Credits are phased out for incomes between $80,000 and $90,000 for single filers and $160,000 to $180,000 for those married filing jointly. You cannot claim the credit for incomes over those amounts.

Students must meet the following requirements:

  • Must be pursuing a degree or education credential
  • Be enrolled at least half time for at least one academic period of the year
  • Not have finished four years of college at the beginning of the year
  • You can’t claim the AOTC or the former Hope credit for more than four tax years
  • No felony drug convictions at the end of the tax year

Lifetime Learning Credit

The Lifetime Learning Credit (LLC) can cover qualified tuition and higher education expenses undertaken by eligible students pursuing higher education in a qualified educational institution. This credit is for undergraduate, graduate, and professional students and is worth up to $2,000 per tax return. Even better, there is no limit on the number of years you can claim this credit.

To qualify, you must

  • Pay for qualified expenses for higher education at an eligible educational institution
  • Be pursuing higher education yourself or have a spouse or dependent pursuing higher education on your tax return
  • Be enrolled in at least one academic period at the beginning of the tax year
  • Have a MAGI below $67,000 for single filers in 2018 and $134,000 if you’re married filing jointly

Note that this credit phases out between $57,000 and $67,000 MAGI for single filers and $114,000 and $134,000 for those married filing jointly. Anyone with incomes over those limits cannot claim this credit.

Student loan interest deduction

If you, your spouse or a dependent on your tax return pays interest on a qualified student loan in 2018, you may be able to deduct the lesser of $2,500 or the amount of interest you paid. This deduction is available for individuals with a MAGI below $80,000 (or $160,000 if married filing jointly). You can also claim this deduction even if you do not itemize on your taxes.

Business deduction for work-related higher education

If you work for someone else or you’re self-employed and you itemize when you file taxes, you may be able to deduct expenses for work-related education. The deduction is worth an “amount by which your qualifying work-related education expenses plus other job and certain miscellaneous expenses is greater than 2% of your adjusted gross income,” notes the IRS.

To qualify for this deduction, you must be a working individual, itemize your deductions on Schedule A (Form 1040 or 1040NR) if you’re an employee, file Schedule C, Schedule C-EZ, or Schedule F if you’re self-employed, and have qualifying work-related education expenses.

Major Life Moment: Getting Married

While getting married can make a drastic impact on how much you pay in taxes each year, the changes may be more nuanced than it seems. For the most part, your marital taxes will depend on your combined income and tax bracket as well as whether you file separate tax returns or married filing jointly.

A few deductions that can impact your tax load once you get married include:

Increased standard deduction

For the 2018 tax year, the standard tax deduction has been increased to $12,000 for individuals and $24,000 for married couples. These amounts are nearly double what they were in 2017 ($6,350 for singles and $12,700 for married couples filing jointly).

Charitable contributions

If you itemize your taxes and donate money to charity each year, you may be able to deduct some or all of your donations. Your donation must be to a qualified charitable organization as defined by the IRS, and you must keep a written or printed record of the transaction.

Contributions to individuals are never deductible. You can donate items instead of cash (such as a donation of clothing or furniture to a Goodwill Store), but you can only deduct fair market value. If you plan to make a donation of noncash property worth more than $5,000, you’ll need to have a qualified appraisal of the property first and fill out Form 8283, Section B on your tax return.

In 2018, taxpayers can deduct the full amount of their cash donations to charity provided the deduction does not exceed 60% of their adjusted gross income (AGI). If you donate more than 60% of your AGI in a single tax year, you may also be able to carry over amounts to the next five years. This IRS quiz can help you determine if you’re eligible and how much you can deduct in charitable contributions this year.

Your Working Years

Deductions for contributions to qualified retirement accounts

For the 2018 tax year, you can deduct up to $5,500 in contributions to an IRA ($6,500 if you’re ages 55 and older) provided you meet income requirements. Your deduction may be limited if you or your spouse have a retirement plan at work, or if your income exceeds maximums outlined by the IRS.

If you are covered by a retirement plan at work, you can take the full deduction for IRA contributions if you’re single and your MAGI is below $63,000; married filing jointly or a qualifying widower with a MAGI of $101,000 or less, or married filing separately with a MAGI of $10,000 or less. The credit is phased out for single filers with a MAGI between $63,000 and $73,000 and those married filing jointly or qualifying widowers with a MAGI between $101,000 and $121,000. If you’re married filing separately with a MAGI over $10,000 you do not qualify for this deduction.

If you do not have a retirement plan at work, deductions for IRA contributions are limited to:

  • Single, head of household, or qualifying widower: Take the full deduction up to the amount of your contribution limit.
  • Married filing jointly or separately with a spouse who is not covered by a plan at work: Take the full deduction up to the amount of your contribution limit.
  • Married filing jointly with a spouse who does have a retirement plan at work: Take a full deduction if your MAGI is $189,000 or less, a partial deduction if your MAGI is between $189,000 and $199,000, and no deduction if you MAGI is $199,000 or more.
  • Married filing separately with a spouse that is covered with a plan at work: Take a partial deduction if your MAGI is less than $10,000 and no deduction if your MAGI is higher than that.

If you have a 401(k), SEP IRA, Solo 401(k), or another type of employment-based retirement plan, you can deduct amounts you contribute on your taxes up to certain limits. Those limits are as follows for 2018 (and 2019):

 2018 tax year2019 tax year
SEP IRA25% of employee compensation up to $55,000 in 2018 25% of employee compensation up to $56,000 in 2019
Simple IRA$12,500$13,000
SARSEP Plans (Simplified Employee Pension)25% of employee compensation up to $55,000 in 2018 25% of employee compensation up to $56,000 in 2019
One participant 401(k) plans, including Solo 401(k)$18,500 or $24,500 if age 50 and older, but a self-employed business owner can also contribute another 25% of compensation as defined by the plan up to $55,000 total$19,000 or $25,000 if age 50 and older, but a self-employed business owner can also contribute another 25% of compensation as defined by the plan up to $56,000 total

Individuals age 50 and older may also contribute an additional $6,000 per year to their retirement account if they have a 401(k), 403(b), SARSEP or governmental 457(b). Catch-up contributions for Simple IRA or Simple 401(k) plans are limited to $3,000 through 2019. As mentioned already, individuals age 50 and older can also contribute an additional $1,000 toward an IRA as a catch-up contribution.

Earned income tax credit

While the earned income tax credit (EITC) is available to all workers who qualify, the effect is more notable for those who have children. This credit is available to people who work for themselves or someone else who meet certain income requirements, and the amount of the credit increases when you claim more children as dependents.

In 2018, the EITC is limited to:

  • $6,431 with three or more qualifying children
  • $5,716 with two qualifying children
  • $3,461 with one qualifying child
  • $519 with no qualifying children

Income limits to qualify for the credit are as follows:

 No childrenOne childTwo childrenThree or more children
Single, Head of Household, or Widowed$15,270$40,320$45,802$49,194
Married Filing Jointly$20,950$46,010$51,492$54,884

You must also have $3,500 or less in investment income per year to qualify for this credit.

Qualified transportation fringe benefit

Employees who work for an employer who offers qualified transportation fringe benefits may receive up to $260 per month for transit vouchers or commuter highway vehicle fares and another $260 per month for work-related parking fees.

Saver’s credit

For the 2018 tax year, you may be eligible for the Saver’s credit if your income is below certain limits and you contribute to a qualifying retirement account such as an IRA or employer-sponsored account. You may be eligible if you’re age 18 or older, not a student and not a dependent on anyone’s tax returns.

The credit can be worth 50%, 20%, or 10% of your retirement plan contributions depending on your income, with a maximum credit amount of $2,000 (or $4,000 if you are married and filing jointly).

To receive the 50% credit return for the 2018 tax year, your AGI must not be more than $38,000 if you’re married filing jointly, $28,500 if you’re head of household, or $19,000 for all other filers. In 2019, those income limits change to $38,500, $28,875 and $19,250 respectively.

State and Local Taxes Deduction (SALT)

The SALT tax deduction allows individuals to deduct state and local taxes (including property taxes) from the income they report on their federal taxes. The value of the SALT deduction is capped at $10,000 as of 2018. Also note that this deduction is only available to people who itemize.

Home office deduction

If you work out of an office in your home, you may be able to deduct some of your qualified business expenses. This deduction can be used by homeowners and renters alike, and it applies to all types of homes. You must report regular and exclusive use to use this credit, however, and your home must be the primary location where your business is run.

Generally speaking, deductions for a home office are based on the percentage of the home you use for business purposes. And while the IRS offers a standard method for computing the deduction, busy small-business owners may want to consider the simplified option.

Major Life Moment: Buying a Home

Mortgage interest tax deduction

If you itemize when you file your taxes, you may be able to deduct interest you pay on your home mortgage. For the 2018 tax year, however, the limit on home loans you can deduct interest on has been reduced. You can now deduct the mortgage interest on up to $750,000 of debt for home loans, or $375,000 if you’re married but filing a separate return.

According to the IRS, this deduction can also apply to home equity loans and HELOCs provided the funds you borrow are used to “buy, build or substantially improve the taxpayer’s home that secures the loan.”

Tax savings for points

If you paid “points” to your lender when you took out a home mortgage to reduce your interest percentage, you may be able to deduct the amount spent on your taxes as part of your mortgage interest tax deduction in the year you pay them. This deduction is usually available provided the loan is secured by your home, the amount of points you pay is typical for where you live, and the cash you paid at closing in your down payment equals the points.

Residential Energy Efficient Property Credit

You may be able to take a special tax credit when you make energy efficient improvements to your home. To qualify, you must have lived in the home for the year and it must be your primary residence.

According to the IRS, this tax credit is currently offered on “qualified solar electric property, solar water heating property, small wind energy property, geothermal heat pump property, and fuel cell property.” This also includes labor costs and money spent on wiring or piping needed to connect the device to your home. The credit is for up to 30% of your costs. For qualified fuel cell property, the credit is limited to $500 “for each one-half kilowatt of capacity of the property.”

Property tax deduction

Homeowners who itemize their tax returns can deduct up to $10,000 per year in state and local income taxes (SALT) as we mentioned above, and this includes property taxes. This deduction is good for property taxes you pay starting on the date you purchased your home. However, it is not applicable to seller’s delinquent property taxes from the prior year at the time you close on the sale of your home.

Keep in mind, however, that you can only deduct property taxes themselves on your return, and that this amount may be different than amounts withheld for property taxes and homeowners insurance in your mortgage escrow account.

Your Caregiving Years

Child tax credit

The tax credit for having a dependant child goes up to $2,000 per child in 2018 for dependents under the age of 17. The MAGI income threshold for this credit is $400,000 for couples filing jointly and $200,000 for individual filers. Taxpayers with incomes over those amounts are subject to a phase out of the credit.

According to the IRS, up to $1,400 of the credit can be refundable for each qualifying child, meaning you could receive a refund even if you don’t owe any taxes.

Also note that you may be able to receive a tax credit for other dependents. This credit is a non-refundable tax credit of up to $500 for qualifying dependants that are a U.S. citizen, U.S. national, or a U.S. resident alien.

Child and dependant care credit

You may be able to deduct some of your child care expenses if paying for dependent care allowed you to work and earn an income. The limit on the child and dependant care credit is $3,000 for one qualifying individual or $6,000 for two or more qualifying individuals. You are not eligible to take this credit if you are married filing separately.

Also note that noncustodial parents that claim a child as a dependent may not be able to claim the child and dependent care credit since the children of divorced parents may be treated as a qualifying individual for the custodial parent.

Adoption credit

For adoptions finalized in 2018, adoptive parents may be able to deduct up to $13,810 per child. This credit is nonrefundable, meaning you won’t receive this amount if you don’t owe any tax. However, parents can carryover any unused credit from one year to the next.

An eligible child is any child you adopted under the age of 18, and the credit applies to any adoption-related expenses parents incur. However, income limits apply and reduce the number of people who can qualify for this credit. In 2018, those with a modified adjusted gross income (MAGI) over $247,140 cannot claim the credit. Those with a MAGI between $207,140 and $247,140 can claim a partial credit.

Child and dependant care credit

This credit applies to both care for a child or care for an aging parent that is your dependent, and it hinges on whether or not you paid someone for help. For example, If you did pay for elderly care for a dependent parent during the tax year, you may be able to qualify for up to $3,000 in tax credits.

Major Life Moment: Moving

Deduction for moving expenses

You may be able to deduct moving expenses on your taxes provided you moved for a business-related reason (such as changing jobs), your move date is close to the date your work situation changes, you’re moving at least 50 miles further than your old job was from your old place of employment and you have worked 39 weeks at your new job after your arrival in the new area. However, you don’t have to satisfy the distance or time tests if you’re a member of the Armed Forces.

This quiz from the IRS can help you determine whether you’re eligible to deduct moving expenses and if so, how much. Also note that you cannot deduct moving expenses reimbursed by your employer if they are excluded from your income.

Capital gains exclusion from a home sale

If you lived in your primary residence for at least two of the last five years and decide to sell, you may be able to exclude $250,000 of profits earned from the sale (for individuals) or $500,000 of profits earned from the sale (for couples married filing jointly).

Bonus: Medical expenses

Medical expenses tax deduction

If you wound up with considerable medical expenses during 2018, the IRS allows you to deduct any that exceed 7.5% of your adjusted gross income (AGI). Starting in 2019, however, taxpayers can only deduct the amount of the total unreimbursed expenses that exceed 10% of their AGI.

These expenses can include preventative care, psychiatric treatment, surgeries, dental care, prescription medications, and other qualified medical expenses like glasses, contacts, hearing aids and dentures. To claim this deduction, you have to itemize when you file your taxes.

Credit for the Elderly or the Disabled

If you are age 65 or older or retired on permanent and total disability, you receive taxable disability income within the tax year, and you have an income below certain limits, you could qualify for the tax credit for the elderly or the disabled.

Income limits for this credit depend on whether your spouse is living or lived part of the year, your age, and whether you are on permanent and total disability, but they are generally low. If, for example, you are single, head of household, or a qualifying widower, you can’t have an AGI over $17,500 and the total of your nontaxable social security and other nontaxable pension(s), annuities, or disability income cannot be more than $5,000.

Healthcare premium tax credits

When you buy a health insurance plan in the Health Insurance Marketplace at (or in your state exchange if they have one), you may qualify for healthcare premium tax credits depending on your income and other factors. This credit is refundable, meaning you can receive it back even if you don’t owe tax. However, the size of your credit is offered on a sliding scale based on income and varies depending on the price of healthcare plans in your state or municipality.

You must report a MAGI of more than 100% and less than 400% of the federal poverty limit for your family size to qualify for this credit. Those whose incomes fall within this range will receive all or part of the tax credit depending on their income, their family size, and other factors. While the total amount of these credits can vary, bigger credits tend to go to those with the lowest incomes.

As an example, a family of four with a MAGI of $100,400 in 2018 would be ineligible for a premium tax credit since their income is 400% of the Federal Poverty Limit (FPL) that year.

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Coronavirus Pandemic Triggers Investing Regrets Among U.S. Investors

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone and is not intended to be a source of investment advice. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

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As the coronavirus pandemic took a hold of the global economy in early 2020, investors everywhere panicked and sent the stock market plummeting to some of its worst days in recent history. Now that some of the immediate panic has subsided, many American investors are reflecting on recent investment moves that they now regret.

In a new MagnifyMoney survey, we found that many Americans regret their previous investing decisions in light of the COVID-19 crisis. However, many investors are also hopeful for the market’s future, which could make this a perfect time to plan your own future investing moves.

Key findings

  • More than half of investors regret past investing decisions brought to light by the COVID-19 crisis.
    • Younger generations, who are arguably less experienced investors, have more regrets than older investors. A whopping 92% of Gen Z investors admitted to an investing regret in some form or another.
    • Still, 79% of Gen X had regrets, compared to much lower numbers from baby boomers (33%) and the silent generation (24%).
  • About one-third of investors have full confidence that their investments will rebound by the end of 2020, but some have more hope than others.
    • Republicans are about twice as likely as Democrats and Independents to be very confident that their investments will recover by the end of the year.
    • Meanwhile, baby boomers and the silent generation are much less confident in their investments’ recovery than younger investors.
  • Consumers with investment accounts estimate their stock market losses are about $24,400 on average since the coronavirus outbreak slammed the United States in March.
    • Baby boomers and the silent generation lost the most, at roughly $56,000 and $63,300, respectively. Unfortunately, these are the generations likely relying heavily on their investments in retirement.
    • Women estimated they lost about $32,300 through the stock market, while men estimated their investment losses to be around $18,700.
  • More than one-third of Americans think it will be at least a year before the stock market recovers from the pandemic. 
    • However, it’s worth noting that more than 1 in 5 (22%) respondents believe the market will recover in just two to five months.
  • As the stock market shows signs of growth despite the bleak financial picture of many Americans, more than half of respondents agreed that the stock market does not completely depict the financial picture of the average U.S. consumer. 
    • Republicans and those who have investment accounts (including a retirement savings account) are more likely to believe the market mirrors the average consumer (around 35% in each group), compared to Democrats (24%) and those without investment accounts (13%).

The most common investing regrets amid coronavirus pandemic

Among our respondents, the top investing regret was a lack of portfolio diversification, a regret cited by 23% of respondents. Gen X respondents regretted this mistake the most at about 29%, with millennials not far behind at 27%. At 30%, men also cited this regret more than the 13% of women who admitted to making this error.

The second most common investment regret cited (19%) was taking on risky investments. Nearly one-third of Gen Z investors got burned by a risky investment. And while baby boomers and the silent generation were less likely to make this mistake, a quarter of Gen X confessed regretting this potentially costly move.

Some examples of high-risk investments can include initial public offerings (IPOs), structured products and venture capital trusts. You also may take on considerable risk if you’re trying to time the market for maximum returns, which many experts caution against.

The third common investment regret among respondents (13%) was keeping all of their savings in the stock market. Gen Z investors were the most guilty of this mistake, with 27% regretting keeping all of their savings in investments, followed by 15% of millennials, 13% of Gen X, 7% of baby boomers and a mere 2% of the silent generation.

How to avoid investing regrets

Luckily, these investing regrets are easily avoidable. Even if you found yourself regretting your pandemic-induced investment moves, there’s still time to recover.

Diversify your portfolio

For starters, it’s important to keep your assets diversified, or spread among different investments and across industries, whether you’re a beginner or an investing veteran. That way, when one part of the market takes a tumble, the other parts of your portfolio aren’t hit as badly, or at all. Essentially, by avoiding putting all of your eggs in one basket, your investments can be better protected in a downturn.

Cushion your risky investments

Keeping your portfolio well-balanced and diversified can also help mitigate risky investments that you might have taken on. It also helps to invest your money incrementally rather than in lump sums. That way, you’ll invest in both down and up times, balancing out your investment gains rather than going all in now and regretting your risk-taking later.

Acting reactively to the market is also a risk of its own. If you sell your assets just because everyone else is panicking, prices are driven down and you end up losing money because you’re making less on the sale than what you paid when you bought the asset. Instead, ride it out and keep your money invested. The markets will recover, and your assets’ valuation will go back up, too.

Invest toward long-term gains

Due to its nature, investing is a risky business. There’s the chance of losses and there is no guaranteed payout amount waiting for you. Because of these factors, it’s generally a bad idea to place all your savings bets on your investments. If you need cash in a downturn, you’ll be selling at a loss to withdraw from your investment accounts. Even further, selling off assets and turning them into cash takes time, making this a much less convenient method of withdrawing money than, say, heading to the ATM.

Instead, you should keep your investments geared toward the future, establishing more long-term goals for your investment accounts. This is why retirement accounts are often investment-based — it gives your investments time to accumulate, but also to ride out the many fluctuations of the market.

For your more immediate cash needs, keep money in a high-yield savings account. This allows for easier withdrawals and transfers, and ensures your money still grows. You can also open an interest-bearing checking account to make sure your money is growing no matter what account it’s in.


MagnifyMoney commissioned Qualtrics to conduct an online survey of 2,008 Americans, with the sample base proportioned to represent the overall population. The sample population included 1,183 investors and 866 non-investors. We defined the generations in 2020 as follows:

  • Gen Z is defined as ages 18 to 22
  • Millennials as ages 23 to 38
  • Gen X as ages 39 to 53
  • Baby boomers as ages 54 to 73
  • Silent generation as ages 74 and over

The survey was fielded from April 28 to May 1, 2020.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

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Study: The Best U.S. Cities for Working from Home

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

Written By

As the coronavirus pandemic continues to change life across the nation, many workers have shifted to remote work to adhere to social-distancing guidelines. Luckily, working from home has never been easier. Thanks to advances in technology, many professionals have been able to continue plowing through their to-do lists from the comfort of their couch.

However, some cities are better for remote work than others. Cities that are more appealing to telecommuters have higher earning power for the remote workers who live there and more remote work opportunities. Additionally, cities with longer commute times also make it more appealing for residents to choose to work from home.

To determine the best cities for working from home, MagnifyMoney combed through the Census Bureau’s 2018 1-Year American Community Survey (conducted before the coronavirus pandemic began). We examined the 100 largest U.S. cities by the number of workers, classifying them by metrics related to how many people work from home, their earning power and their cost of living.

Key findings

  • Gilbert, Ariz. is rated the best place to work from home, due to a sharp rise in the number of people working from home, which indicates more remote work opportunities, as well as the fact that remote workers there make $1.32 for every dollar earned by the average worker.
  • The second best place to work from home is Atlanta, thanks to factors like a rise in people working from home from 2017 to 2018 and good pay for remote workers. Additionally, local housing costs in Atlanta were equal to just 27% of earnings for the average person who works from home.
  • Aurora, Colo. comes in third, with residents who work remotely skipping out on the 30-minute average daily commute there.
  • The worst city to work from home was Toledo, Ohio, which had a low and stagnant number of people working from home, indicating few remote work opportunities. Those who do work from home in Toledo generally earned less in comparison to average earnings.
  • The second worst city to work from home was El Paso, Texas, followed by Greensboro, N.C.
  • On average, across the 100 cities analyzed, working from home tended to pay better than not working from home.
  • Overall, the number of people working from home is fairly flat, suggesting that the so-called “telecommuting revolution” had yet to come to fruition before COVID-19.
  • Long commutes did not necessarily translate to more people working from home. While New York and New Jersey had the longest average commutes, they did not see much of an increase in the number of people working from home.

Best cities for working from home

Topping our study’s ranking of the best cities to work from home is Gilbert, Ariz. Gilbert, a suburb located southeast of Phoenix, measures just over 72 square miles and has a population of more than 230,000.

Our study found that the average person working from home in Gilbert makes $1.32 for every dollar the average person makes, earning it a tie for the 20th spot regarding that metric. Gilbert also ranked high for two metrics measuring the city’s overall work-from-home climate. It ranked fourth for its share of remote workers, with 4.90% of residents working from home, and sixth for the percent change in the number of people working from home from 2017 to 2018, a 1.20% year-over-year increase. Additionally, the average commute time of a typical worker in Gilbert is 28 minutes, earning Gilbert the 27th spot for that metric as telecommuters are saving nearly half an hour each way.

All of these metrics contributed to Gilbert’s overall top ranking, making it a great option for telecommuters looking for a balanced lifestyle of good pay, a remote work-friendly culture and a decent chunk of time saved from commuting.

Atlanta snags the spot for the second best city to work from home, thanks to the high earning power of remote workers and a culture friendly to telecommuting. Atlanta has a high work-from-home rate, with 4.50% of people working from home, earning it a sixth-place ranking for that metric. Remote workers in Atlanta make $1.13 for every dollar the average worker pulls in, and housing costs accounted for just 27% of a remote worker’s earnings, landing it the 22nd spot for that metric.

Rounding out the top three for our study on the best cities to work from home is Aurora, Colo. Aurora’s rankings were boosted by the fact that remote workers in Aurora make $1.41 for every dollar that the average person makes — earning the city the 11th spot for that metric. The city also boasts 3.50% of people working from home, which landed it in 19th spot for that metric. Additionally, workers in Aurora had an average commute time of 30 minutes, which means, conversely, remote workers get to skip out on a half hour long-commute, earning the city the 18th spot for the commute time metric.

Overall, the best state to work remotely seems to be Arizona — three cities, all Phoenix suburbs, cracked our study’s top 10 best cities to work from home ranking: Gilbert (first), Chandler (seventh) and Scottsdale (tenth). Another state with a strong presence in our study’s top 10 best cities to work from home is Colorado, with Aurora ranking second and Denver ranking sixth.

Worst cities for working from home

The U.S. city falling to the bottom of our study’s ranking — making it the worst city to work from home — is Toledo, Ohio. Located in the northwest region of Ohio, Toledo has a population of around 276,000.

Remote workers in Toledo pulled in far less than the average worker, earning just $0.58 for every $1 earned by an average worker and resulting in the city ranking 99th for that metric. Additionally, remote workers in Toledo spent an average of 51% of their earnings on housing, underscoring remote workers’ overall low earning power. Toledo also had a staggeringly low percentage of residents working remotely — 0.90% — which indicates the poor overall culture of remote work and opportunity in the city.

The second worst city to work from home, according to our study, is El Paso, Texas. Remote workers in El Paso also had dismal earning power, with people who work from home making just $0.81 for every dollar earned by the average worker, and housing costs accounting for 45% of remote workers’ earnings. Like Toledo, El Paso also had a relatively low percentage of remote workers overall, with 1.60% of people working from home, placing the city 87th for that metric.

Meanwhile, our study found that Greensboro, N.C., is the third worst city to work from home. Greensboro ranked last for the metric measuring the growth in the number of people working from home, with 1.90% fewer people working remotely in 2018 compared to 2017, indicating a possible decline in remote work opportunity there. Remote workers also weren’t saving a particularly significant amount of time by telecommuting, with the average commute time for residents in Greensboro being just 21 minutes.

Overall, our study found that there are bad cities for working from home nationwide, from the Northeast all the way to the West Coast.

Advantages and disadvantages of working from home

As is the case with clocking your 9-to-5 hours in a cubicle, many of us have discovered during the pandemic that there are both advantages and disadvantages to working from the comfort of your couch.

Advantages of working from home

  • Potentially higher pay: Our survey found that in many cities, remote workers raked in more money than non-remote workers. For example, in Norfolk, Va., the average remote worker made $1.68 for every dollar earned by the average worker. One reason for this could be that, according to the BLS, the more popular occupations for remote work include jobs in management, business and finance, all of which tend to be higher-paying.
  • Money saved on transportation: The cost of commuting is not something to overlook. Depending on the state in which you live, you could spend between $2,000 to $5,000 a year on commuting costs. Working from home enables you to save thousands of dollars a year.
  • Money saved on childcare: One of the biggest incentives for working from home is the flexibility it allows — especially for parents with kids to care for. For working parents, the cost of childcare can add up to hundreds of dollars a week. If a parent works from home, they might be able to avoid paying for a daycare service or nanny.

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Disadvantages of working from home

  • Strain on relationships with colleagues: Working from home could have a negative effect on your relationships with your colleagues. At least one study has found that remote workers were more likely to report that their co-workers treat them poorly and exclude them.
  • Lack of work-life balance: When your home doubles as your workspace, it can be difficult to unplug. Indeed, one survey from found that unplugging after work hours is the biggest challenge among telecommuters. Achieving a healthy work-life balance when you work from home can certainly be a challenging obstacle to overcome.


For our study, we looked at data from the 2018 Census Bureau’s 1-Year American Community Survey. Metrics analyzed included:

  • The percentage of people who work from home.
  • Earnings for people working from home relative to average earnings of local workers.
  • The percentage point change in the share of workers working from home from 2017 to 2018.
  • The percentage point change in earnings for people who work from home from 2017 to 2018.
  • Housing costs as a percentage of income for people working from home.
  • Average commute time.

To create the final rankings, we ranked each city in each metric. Using these rankings, we created a final index based on each city’s average ranking. The city with the best average ranking received the highest score, while the city with the lowest average ranking received the lowest score. The cities were then indexed based on the best possible score.

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