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 a simpler go of it under the revised tax code for 2013.
Simpler to deduct your home office
The Internal Revenue Service 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 IRS 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."
Making it simpler
Taxpayers had to fill out the 43-line Form 8829 to determine what part of the home is actually deducted for the business. This was really complicated and took a lot of work.
Working class individuals can take up to $1,500 in educations and $5 for every square foot of room for the deduction in 2014.
Smaller businesses and entrepreneurs will save millions of hours in paperwork by making the change, which the IRS is happy about.
Every person happy about it
A trade group for entrepreneurs, The National Association for the Self-Employed, had passionate 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 2013 returns field in 2014 will be the first returns to handle the situation.
Simpler to deduct your home office
The Internal Revenue Service 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 IRS 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."
Making it simpler
Taxpayers had to fill out the 43-line Form 8829 to determine what part of the home is actually deducted for the business. This was really complicated and took a lot of work.
Working class individuals can take up to $1,500 in educations and $5 for every square foot of room for the deduction in 2014.
Smaller businesses and entrepreneurs will save millions of hours in paperwork by making the change, which the IRS is happy about.
Every person happy about it
A trade group for entrepreneurs, The National Association for the Self-Employed, had passionate 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 2013 returns field in 2014 will be the first returns to handle the situation.
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