Mothers Working At Home

Mothers Break Out

Tim Brinton, Illustration More and more women are turning to home-based businesses as a way to find emotional balance with their work and with their children. But the IRS isn’t making it easy. Reforms are needed; Charmaine Yoest is co-author of Mother in the Middle: Searching for Peace in the Mommy Wars. This article was adapted from her article in Policy Review: The Journal of American Citizenship of The Heritage Foundation.

Wendelyn Martz has lived on both sides of the mommy wars.

An urban planner in Upper Marlboro, Md., she had always intended to pursue a career. She took a leave of only three months after the birth of her son, and she raced back to work to finish a high-profile project just five weeks after her daughter was born.

But slowly she began to burn out. Her husband was working long hours, so all the duties at home landed upon her shoulders. Something had to give.

“I thought, ‘This is not right. I’m cheating someone and I’m probably cheating everyone,’ ” she says. “I needed to be home.”

Finally, she resigned. But she wanted to continue her professional interests.

“I needed work outside of my family,” she says. “My whole world cannot be successfully reduced to just taking care of my children. I’m trying to find that middle ground.”

USA TodayA few years ago, Martz and a partner started a home-based business designing and marketing greeting cards. Sales took off. Her husband lent his marketing expertise to the project, and today her Pathway Art can be found nationwide, from the Borders Books chain to the John F. Kennedy Center for the Performing Arts in Washington, D.C. Her son, age 6, even helps assemble orders and offers his comments on new designs.

Martz’s story is becoming increasingly familiar. A growing number of career women are leaving established companies to start their own. Aided by the tools of the Information Revolution — computers, modems and fax machines — many women with young children are becoming entrepreneurs by establishing home-based businesses. For many women this is the best of both worlds.

Thank you (foot)notes:

This article first appeared in USA Today, July 9, 1996. Reproduced with permission of the copyright owner. Further reproduction or distribution is prohibited without permission.

Yet the Internal Revenue Service has been anything but helpful. At the first national conference on home-based business in 1994, an IRS representative commented that “everyone who took a home-office deduction in 1993 is red-flagged for an audit.”

Stringent IRS rules sometimes make home-business deductions difficult. For example:

Tax expert J.K. Lasser pointed out that one woman who ran a roadside stand selling home-prepared items a mile from her home was not allowed to deduct her home-office expenses because the IRS ruled that the stand was her principal place of business.

The “exclusive use” clause raises a hurdle for people caring for dependents. For example, an IRS auditor who found a diaper-changing table in a home office might disallow the deduction.

Not only that, over the past seven years the IRS has reclassified 439,000 independent contractors as employees and collected more than $750 million in fines.

Setting up roadblocks doesn’t make sense. Not only are home-based businesses good for “working moms,” but they’re also good for the economy. According to the National Foundation for Women Business Owners, U.S. women own 3.5 million home-based businesses. Additionally, they provide full-time or part-time employment for an estimated 14 million people. Martz and her peers are joining an impressive group: Mrs. Field’s Cookies, Estee Lauder Cosmetics, Lane Bryant, Stairmaster and even Steinway pianos all started as home-based businesses.

What’s driving this wave of female entrepreneurs? For the first time in our history, the majority of babies less than a year old have mothers in the paid workforce. In fact, the fastest-growing segment of mothers in the workforce are precisely the ones with the greatest child-care responsibilities — those with children under 6 years of age. Since 1960, these mothers have tripled their workforce participation.

But the effort of women to juggle babies and briefcases has exacted a stiff price. A recent issue of Parents magazine concluded that, among mothers, “emotional conflict is epidemic.” In a reader survey of 18,000 women, the magazine found only 4% would choose full-time employment if they could do “whatever they wished.”

That’s why reform of the tax rules is necessary to favor home businesses, and legislation has been introduced in Congress to do just that.

For example, right now there are 20 factors the IRS takes into consideration to determine whether an individual qualifies as an independent contractor. The proposal would reduce those factors.

Home-based businesses are the wave of the future. Their explosive growth is an indicator of the more independent and dynamic economy of the 21st century.

Our public policies, on the other hand, are outdated. “Consider the tax code,” says Dianne Floyd Sutton of the National Association for the Self-Employed. “It stands like King Canute, commanding the waves of modernization to recede.”

Nevertheless, like the sea that reached the feet of the great king, the future will arrive. The question is, will our policymakers ride the wave of home-based business expansion or keep trying to hold back the tide?