Previously, complicated forms have made it challenging to claim a home office deduction with the Internal revenue Service. The tax agency was quick to scrutinize these claims for issues. However, that process will be much simpler when filing tax forms in 2014.
Easier to deduct your home office
All entrepreneurs and small business owners who want to deduct rooms in their homes on their taxes will have it easier here soon. The IRS is simplifying the procedure.
There were 3.4 million Americans in 2010 who deducted a home office on their taxes.
The tax code section 280A states 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 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 convenience of your employer."
Not so hard anymore
However, in previous years, that was easier said than done. Taxpayers seeking the deduction were (and still are, when filing a 2012 tax return) required to fill out the 43-line Form 8829 to calculate expenditures and the portion of the home used for business. That process many found confusing and troublesome.
In 2014, it will be much less with $5 per square foot of space and up to 300 square feet.
The Internal Revenue Service feels accomplished and like it has saved working class individuals millions of hours of complicated paperwork with the change.
Everybody happy about it
A trade group for entrepreneurs, The National Association for the Self-Employed, had enthusiastic 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 changes will be put on 2013 returns filed in early 2014.
Easier to deduct your home office
All entrepreneurs and small business owners who want to deduct rooms in their homes on their taxes will have it easier here soon. The IRS is simplifying the procedure.
There were 3.4 million Americans in 2010 who deducted a home office on their taxes.
The tax code section 280A states 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 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 convenience of your employer."
Not so hard anymore
However, in previous years, that was easier said than done. Taxpayers seeking the deduction were (and still are, when filing a 2012 tax return) required to fill out the 43-line Form 8829 to calculate expenditures and the portion of the home used for business. That process many found confusing and troublesome.
In 2014, it will be much less with $5 per square foot of space and up to 300 square feet.
The Internal Revenue Service feels accomplished and like it has saved working class individuals millions of hours of complicated paperwork with the change.
Everybody happy about it
A trade group for entrepreneurs, The National Association for the Self-Employed, had enthusiastic 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 changes will be put on 2013 returns filed in early 2014.