Working class individuals who want to claim deductions for their home offices -- a move that is infamous for raising red flags with the Internal Revenue Service -- will find an easier go of it under the revised tax code for 2013.
Home office deduction made easier
The procedure of deducting a room as an office in a home is really complicated, according to the Internal Revenue Service. That is why the process will be made easier.
The IRS reports that 3.4 million Americans deducted home offices as part of their taxes in 2010.
The tax code section 280A says 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 convenience 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 procedure many found confusing and cumbersome.
In 2014, it will be much less with $5 per square foot of room and up to 300 square feet.
The IRS says the form will even be much easier to understand and to fill out. The IRS claims the move will save small company and entrepreneurs 1.6 million hours a year in paperwork and record keeping.
A ton of happy campers
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 2013 returns field in 2014 will be the first returns to handle the situation.
Home office deduction made easier
The procedure of deducting a room as an office in a home is really complicated, according to the Internal Revenue Service. That is why the process will be made easier.
The IRS reports that 3.4 million Americans deducted home offices as part of their taxes in 2010.
The tax code section 280A says 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 convenience 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 procedure many found confusing and cumbersome.
In 2014, it will be much less with $5 per square foot of room and up to 300 square feet.
The IRS says the form will even be much easier to understand and to fill out. The IRS claims the move will save small company and entrepreneurs 1.6 million hours a year in paperwork and record keeping.
A ton of happy campers
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 2013 returns field in 2014 will be the first returns to handle the situation.
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