IRS Offers Simpler Option for Calculating Home Office Tax Deduction—Accounting Today

Qualifying Offices Can Deduct Up to $1,500 Per Year

Michael Cohn at Accounting Today reports that The Internal Revenue Service plans to introduce a simplified way for small business owners and home-based employees to claim the home office tax deduction.

Small business owners and employees who work from home and who maintain a qualifying home office will be able to deduct up to $1,500 per year.  The new option allows qualified taxpayers to deduct annually $5 per square foot of home office space on up to 300 square feet, for as much as $1,500 in deductions.  To take advantage of the new option, taxpayers will complete a much simpler version of the current 43-line form.

The new simplified option will be available starting with the 2013 return that most taxpayers file early in 2014.

The IRS anticipates taxpayers will be able to save more than 1.6 million hours per year in tax preparation time from this simpler calculation method. The effort was described by Deputy Treasury Secretary Neal S. Wolin and SBA Administrator Karen Mills as part of the ongoing efforts by the Obama administration to reduce paperwork burdens.

SBA Administrator Karen Mills Introduces New Law on Home Office Tax Deduction