IRS Announces Simplified Option for Claiming Home Office Deduction Starting
This Year; Eligible Home-Based Businesses May Deduct up to $1,500. Effective
for taxable years beginning on or after Jan. 1, 2013 the Internal Revenue Service today announced a simplified option
that many owners of home-based businesses and some home-based workers may use to
figure their deductions for the business use of their homes. The new optional deduction, capped at $1,500
per year based on $5 a square foot for up to 300 square feet, will reduce the paperwork and recordkeeping
burden on small businesses. Though homeowners using the new option cannot depreciate the portion of their
home used in a trade or business, they can claim allowable mortgage interest, real estate taxes and casualty
losses on the home as itemized deductions on Schedule A. These deductions need not be
allocated between personal and business use, as is required under the regular method.
Business expenses unrelated to the home, such as advertising, supplies and wages paid to employees
are still fully deductible. Current restrictions on the home office deduction, such as the requirement
that a home office must be used regularly and exclusively for business and the
limit tied to the income derived from the particular business, still apply under
the new option. The new simplified option is available starting with the 2013 return filed in 2014. This should make it a little more desireable to take the deduction for those of you who do use their home for business but don't want to bother with the extra paperwork required to take the deduction.
Chris has been working in the industry for over a decade and has a passion for ensuring her clients have the best service in the area of taxation, accounting and bookkeeping.