Taxpayers who want to claim deductions for their home offices -- a move that is notorious for raising warning flags with the Internal Revenue Service -- will find an easier go of it under the revised tax code for 2013.
Simpler to deduct your home office
The Internal Revenue Service said Tues, January 15 that it will be simplifying the procedure for entrepreneurs and small business to deduct rooms in their homes as a place of business this year.
In 2010, the most recent years statistics are available for, 3.4 million Americans claimed deductions for home offices, according to the IRS.
Taxpayers 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 customers in the normal course of your business, or your work as a worker, but only if the use of the home office is for the convenience of your employer."
Simplifying the process
Taxpayers had to fill out the 43-line Form 8829 to determine what part of the home is really deducted for the business. This was really complicated and took a lot of work.
In 2014, it will be much less with $5 per square foot of space and up to 300 square feet.
Smaller businesses and entrepreneurs will save millions of hours in paperwork by making the change, which the Internal Revenue Service is happy about.
A lot of happy campers
The National Association for the Self-Employed is pretty happy about the change, and so are others.
"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 put on 2013 returns filed in early 2014.
Simpler to deduct your home office
The Internal Revenue Service said Tues, January 15 that it will be simplifying the procedure for entrepreneurs and small business to deduct rooms in their homes as a place of business this year.
In 2010, the most recent years statistics are available for, 3.4 million Americans claimed deductions for home offices, according to the IRS.
Taxpayers 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 customers in the normal course of your business, or your work as a worker, but only if the use of the home office is for the convenience of your employer."
Simplifying the process
Taxpayers had to fill out the 43-line Form 8829 to determine what part of the home is really deducted for the business. This was really complicated and took a lot of work.
In 2014, it will be much less with $5 per square foot of space and up to 300 square feet.
Smaller businesses and entrepreneurs will save millions of hours in paperwork by making the change, which the Internal Revenue Service is happy about.
A lot of happy campers
The National Association for the Self-Employed is pretty happy about the change, and so are others.
"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 put on 2013 returns filed in early 2014.
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