Taxpayers who want to claim deductions for their home offices -- a move that is infamous 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 process of deducting a room as an office in a home is really complicated, according to the Internal Revenue Service. That is why the process will be made easier.
The Internal Revenue Service reports that 3.4 million Americans deducted home offices as part of their taxes in 2010.
The tax code section 280A says that a taxpayer can only count the room as a deduction 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 an employee, but only if the use of the home office is for the benefit of your employer."
Used to be too difficult
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 determine 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 space for the deduction in 2014.
Small Businesses and entrepreneurs will save millions of hours in paperwork by making the change, which the Internal Revenue Service is happy about.
Nice to know there is change
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 first returns to include the change will be 2013 returns filed in 2014.
Simpler to deduct your home office
The process of deducting a room as an office in a home is really complicated, according to the Internal Revenue Service. That is why the process will be made easier.
The Internal Revenue Service reports that 3.4 million Americans deducted home offices as part of their taxes in 2010.
The tax code section 280A says that a taxpayer can only count the room as a deduction 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 an employee, but only if the use of the home office is for the benefit of your employer."
Used to be too difficult
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 determine 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 space for the deduction in 2014.
Small Businesses and entrepreneurs will save millions of hours in paperwork by making the change, which the Internal Revenue Service is happy about.
Nice to know there is change
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 first returns to include the change will be 2013 returns filed in 2014.
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