Taxpayers who work out of their homes have found it challenging previously to determine their home office deduction for the Internal Revenue Service. In addition, the deduction is well-known for raising red-flags with the tax agency. However, the Internal Revenue Service claims that process will be simplified and less cumbersome when filing taxes next year.
Looking at a deduction for your home
The IRS said Tues, Jan 15 that it will be simplifying the process for entrepreneurs and small business to deduct rooms in their homes as a place of business this year.
The Internal Revenue Service reports that 3.4 million Americans deducted home offices as part of their taxes in 2010.
Working class individuals can only deduct office expenses in a home, according to section 280A, if it is: "The principal place of business of a trade or business, as a place where you meet with patients, clients, or consumers in the normal course of your business, or your work as an employee, but only if the use of the home office is for the benefit of your employer."
Not so hard anymore
However, in previous years, that was easier said than done. Working class individuals seeking the deduction were (and still are, when filing a 2012 tax return) required to fill out the 43-line Form 8829 to calculate expenditures and the portion of the home used for business. That process many found confusing and cumbersome.
Taxpayers can take up to $1,500 in educations and $5 for every square foot of room for the deduction in 2014.
The Internal Revenue Service feels accomplished and like it has saved working class individuals millions of hours of complicated paperwork with the change.
A lot of happy campers
A trade group for entrepreneurs, The National Association for the Self-Employed, had enthusiastic words for the tax code upgrade.
"This is terrific news for the 52 percent of all small business that work from home, who fight every day to meet their bottom lines while continuing to contribute to the economy," said Kristie Arslan, who heads the group. "The previous calculation for the deduction was cumbersome and time consuming for America's smallest business and year after year hard-earned dollars were left on the table."
The changes will be applied to 2013 returns filed in early 2014.
Looking at a deduction for your home
The IRS said Tues, Jan 15 that it will be simplifying the process for entrepreneurs and small business to deduct rooms in their homes as a place of business this year.
The Internal Revenue Service reports that 3.4 million Americans deducted home offices as part of their taxes in 2010.
Working class individuals can only deduct office expenses in a home, according to section 280A, if it is: "The principal place of business of a trade or business, as a place where you meet with patients, clients, or consumers in the normal course of your business, or your work as an employee, but only if the use of the home office is for the benefit of your employer."
Not so hard anymore
However, in previous years, that was easier said than done. Working class individuals seeking the deduction were (and still are, when filing a 2012 tax return) required to fill out the 43-line Form 8829 to calculate expenditures and the portion of the home used for business. That process many found confusing and cumbersome.
Taxpayers can take up to $1,500 in educations and $5 for every square foot of room for the deduction in 2014.
The Internal Revenue Service feels accomplished and like it has saved working class individuals millions of hours of complicated paperwork with the change.
A lot of happy campers
A trade group for entrepreneurs, The National Association for the Self-Employed, had enthusiastic words for the tax code upgrade.
"This is terrific news for the 52 percent of all small business that work from home, who fight every day to meet their bottom lines while continuing to contribute to the economy," said Kristie Arslan, who heads the group. "The previous calculation for the deduction was cumbersome and time consuming for America's smallest business and year after year hard-earned dollars were left on the table."
The changes will be applied to 2013 returns filed in early 2014.
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