Working class individuals who want to claim deductions for their home offices -- a move that is notorious for raising red flags with the Internal Revenue Service -- will find an easier go of it under the revised tax code for 2013.
Home office deduction made easier
The Internal Revenue Service said Tues, Jan 15 that it will be simplifying the procedure for entrepreneurs and small company to deduct rooms in their homes as a place of business this year.
There were 3.4 million Americans in 2010 who deducted a home office on their taxes.
Section 280A of the tax code allows taxpayers to deduct expenses for an office in a private home if the room 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 benefit of your employer."
Not so hard anymore
It used to be that people would spend hours filling out Form 8829 to be able to determine how much of the home could possibly be deducted from taxes. It was a long process.
In 2014, it will be much less with $5 per square foot of room and up to 300 square feet.
The IRS claims the form will also be much simpler to understand and to fill out. The IRS says the move will save small business and entrepreneurs 1.6 million hours a year in paperwork and record keeping.
Every person happy about this
The change has gotten a lot of good press, particularly from the National Association for the Self-Employed.
"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 first returns to incorporate the change will be 2013 returns filed in 2014.
Home office deduction made easier
The Internal Revenue Service said Tues, Jan 15 that it will be simplifying the procedure for entrepreneurs and small company to deduct rooms in their homes as a place of business this year.
There were 3.4 million Americans in 2010 who deducted a home office on their taxes.
Section 280A of the tax code allows taxpayers to deduct expenses for an office in a private home if the room 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 benefit of your employer."
Not so hard anymore
It used to be that people would spend hours filling out Form 8829 to be able to determine how much of the home could possibly be deducted from taxes. It was a long process.
In 2014, it will be much less with $5 per square foot of room and up to 300 square feet.
The IRS claims the form will also be much simpler to understand and to fill out. The IRS says the move will save small business and entrepreneurs 1.6 million hours a year in paperwork and record keeping.
Every person happy about this
The change has gotten a lot of good press, particularly from the National Association for the Self-Employed.
"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 first returns to incorporate the change will be 2013 returns filed in 2014.
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