Working class individuals who want to claim deductions for their home offices -- a move that is notorious for raising warning flags with the Internal Revenue Service -- will find a simpler go of it under the revised tax code for 2013.
A new 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 IRS is simplifying the process.
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 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."
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 determine expenditures and the portion of the home used for business. That process many found confusing and cumbersome.
In 2014, those calculations will be made simpler. Working class individuals can claim $5 for every square foot of the space for up to 300 square feet, or $1,500.
The IRS feels accomplished and like it has saved taxpayers millions of hours of complicated paperwork with the change.
Praise for the tax code 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 changes will be put on 2013 returns filed in early 2014.
A new 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 IRS is simplifying the process.
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 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."
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 determine expenditures and the portion of the home used for business. That process many found confusing and cumbersome.
In 2014, those calculations will be made simpler. Working class individuals can claim $5 for every square foot of the space for up to 300 square feet, or $1,500.
The IRS feels accomplished and like it has saved taxpayers millions of hours of complicated paperwork with the change.
Praise for the tax code 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 changes will be put on 2013 returns filed in early 2014.
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