This simplified option does not change the rules for who may claim a home office deduction. It merely simplifies the calculation and recordkeeping requirements. The new option can save you a lot of time and will require less paperwork and recordkeeping.
Here are six facts the IRS wants you to know about the new, simplified method to claim the home office deduction.
- You may use the simplified method when you file
your 2013 tax return next year. If you use this method to claim the home
office deduction, you will not need to calculate your deduction based
on actual expenses. You may instead multiply the square footage of your
home office by a prescribed rate.
- The rate is $5 per square foot of the part of your home used for
business. The maximum footage allowed is 300 square feet. This means the
most you can deduct using the new method is $1,500 per year.
- You may choose either the simplified method or the actual expense
method for any tax year. Once you use a method for a specific tax year,
you cannot later change to the other method for that same year.
- If you use the simplified method and you own your home, you cannot
depreciate your home office. You can still deduct other qualified home
expenses, such as mortgage interest and real estate taxes. You will not
need to allocate these expenses between personal and business use. This
allocation is required if you use the actual expense method. You’ll
claim these deductions on Schedule A, Itemized Deductions.
- You can still fully deduct business expenses that are unrelated to
the home if you use the simplified method. These may include costs such
as advertising, supplies and wages paid to employees.
- If you use more than one home with a qualified
home office in the same year, you can use the simplified method for only
one in that year. However, you may use the simplified method for one
and actual expenses for any others in that year.
IRS Circular 230 Disclosure
Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication
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