Taxpayers who work out of their homes have found it challenging previously to determine their home office deduction for the Internal Revenue Service. In addition, the deduction is notorious for raising red-flags with the tax agency. However, the Internal Revenue Service states that procedure will be made easier and less troublesome when filing taxes next season.
Home office deduction made easier
The IRS said Tues, Jan 15 that it will be simplifying the process for entrepreneurs and small company to deduct rooms in their homes as a place of business this year.
In 2010, the most recent years statistics are accessible for, 3.4 million Americans claimed deductions for home offices, according to the IRS.
The tax code section 280A claims 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 a worker, but only if the use of the home office is for the benefit of your employer."
Simplifying the process
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.
Smaller businesses and entrepreneurs will save millions of hours in paperwork by making the change, which the Internal Revenue Service is happy about.
Quite a bit of good news
A trade group for entrepreneurs, The National Association for the Self-Employed, had passionate 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.
Home office deduction made easier
The IRS said Tues, Jan 15 that it will be simplifying the process for entrepreneurs and small company to deduct rooms in their homes as a place of business this year.
In 2010, the most recent years statistics are accessible for, 3.4 million Americans claimed deductions for home offices, according to the IRS.
The tax code section 280A claims 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 a worker, but only if the use of the home office is for the benefit of your employer."
Simplifying the process
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.
Smaller businesses and entrepreneurs will save millions of hours in paperwork by making the change, which the Internal Revenue Service is happy about.
Quite a bit of good news
A trade group for entrepreneurs, The National Association for the Self-Employed, had passionate 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.
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