Taxpayers who work out of their homes have found it difficult in the past to calculate their home office deduction for the Internal Revenue Service. In addition, the deduction is notorious for raising red-flags with the tax bureau. However, the IRS says that procedure will be made easier and less cumbersome when filing taxes next year.
Home office deduction
All entrepreneurs and small company owners who want to deduct rooms in their homes on their taxes will have it easier here soon. The Internal Revenue Service is simplifying the process.
In 2010, the most recent years statistics are available for, 3.4 million Americans claimed deductions for home offices, according to the IRS.
Section 280A of the tax code allows working class individuals 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."
Making it easier
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, those calculations will be made easier. Taxpayers can claim $5 for every square foot of the space for up to 300 square feet, or $1,500.
The IRS claims the form will also be much simpler to understand and to fill out. The Internal Revenue Service says the move will save small company and entrepreneurs 1.6 million hours a year in paperwork and record keeping.
Nice to know there is change
The change has gotten a ton 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
All entrepreneurs and small company owners who want to deduct rooms in their homes on their taxes will have it easier here soon. The Internal Revenue Service is simplifying the process.
In 2010, the most recent years statistics are available for, 3.4 million Americans claimed deductions for home offices, according to the IRS.
Section 280A of the tax code allows working class individuals 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."
Making it easier
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, those calculations will be made easier. Taxpayers can claim $5 for every square foot of the space for up to 300 square feet, or $1,500.
The IRS claims the form will also be much simpler to understand and to fill out. The Internal Revenue Service says the move will save small company and entrepreneurs 1.6 million hours a year in paperwork and record keeping.
Nice to know there is change
The change has gotten a ton 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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