With the tax return deadline right around the corner, it’s important for taxpayers to stay abreast of the changes to the Code that take effect this tax year. One such change involves the previously-nightmarish “Home Office” Deduction.
Increasingly, American taxpayers have started and run businesses not from business-specific buildings or rented office space, but from their own homes. Realizing this changing nature of small business, the Internal Revenue Service created the Home Office Deduction, which allows a Home-Based Business Owner to claim a deduction if the taxpayer uses a certain portion of the home exclusively for business purposes.
In the past, claiming this deduction was difficult and time-consuming, requiring the taxpayer to fill out a 43-line form with complex calculations. Now, however, the taxpayer can fill out a simplified form. Also, taxpayers using the simplified method need not allocate mortgage interest, casualty losses, or real estate taxes between business and personal use.
If you work from home, make sure to ask your tax professional if you qualify for this deduction and, if so, how to claim it. Don’t forget that 2013 Tax Year Individual Returns are due Tuesday, April 15, 2014. Prescott Law Group is available to help you with all of your legal tax needs, including tax disputes, tax-based estate planning, and business tax planning. Call (928) 445-1909 to schedule a consultation.
- “Reminder To Home-Based Businesses: Simplified Option for Claiming Home Office Deduction Now Available; May Deduct up to $1,500; Saves 1.6 Million Hours A Year” – IRS Press Release, March 7, 2014
- “Business Use of Your Home” – IRS Publication 587, December 11, 2013
- “FAQs – Simplified Method for Home Office Deduction” – IRS.gov, March 20, 2014
- “The Home Office Deduction: What You Need To Know” – Forbes.com (Deborah L. Jacobs), March 24, 2014
- “Deducting Your Home Office, Made Simpler This Year” – NYTimes.com (Ann Carrns), March 13, 2014.