Editor's Note: This article was written and submitted by Rich Jacques.
The Internal Revenue Service is offering a new option that would reduce paperwork for taxpayers who submit deductions for working out of their homes, the agency’s commissioner said.Like Merrick Patch on Facebook by clicking here.
An estimated 3.4 million taxpayers have claimed deductions for the business use of their homes during the past few years, IRS Commissioner Steven Miller said.
The agency is now providing a new optional deduction, which is capped at $1,500 per year based on $5 per foot for up to 300 square feet, that would reduce paperwork and recordkeeping burdens on small businesses.
“This is a common sense rule to provide taxpayers an easier way to calculate and claim the home office deduction,” Miller said. “The IRS continues to look for similar ways to combat complexity and encourages people to look at this option as they consider tax planning in 2013.”
Currently, taxpayers are required to fill out a 43-line form that includes complex calculations of allocated expenses, depreciation and carryovers of unused deductions.
But the new home office deduction form will be significantly simplified, Miller said.
While homeowners using the new option would not be able to depreciate the portion of their home used for business, they could claim allowable mortgage interest, real estate taxes and casualty losses on the home as itemized deductions.
Business expenses unrelated to the home, such as advertising, supplies or wages paid to employees, are still fully deductible.
Under the new option, restrictions such as the requirement that a home office must be used regularly and exclusively for business are still applicable.
The new option will be available with the 2013 return most taxpayers will file in early 2014. For more information on the option, click on Revenue Procedure 2013-14 on the IRS’s website.
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