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.
Simpler to deduct your home office
All entrepreneurs and small company owners who want to deduct rooms in their homes on their taxes will have it easier here soon. The IRS is simplifying the procedure.
The IRS reports that 3.4 million Americans deducted home offices as part of their taxes in 2010.
Working class individuals can only deduct office expenditures in a home, according to section 280A, if it is: "The principal place of business of a trade or business, as a place where you meet with patients, clients, or customers 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. Working class individuals seeking the deduction were (and still are, when filing a 2012 tax return) required to fill out the 43-line Form 8829 to calculate expenses and the portion of the home used for business. That process many found confusing and troublesome.
Taxpayers can take up to $1,500 in educations and $5 for every square foot of space for the deduction in 2014.
The Internal Revenue Service states the form will even be much simpler to understand and to fill out. The Internal Revenue Service states the move will save small business and entrepreneurs 1.6 million hours a year in paperwork and record keeping.
Every person happy about this
The National Association for the Self-Employed is pretty happy about the change, and so are others.
"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 deal with the situation.
Simpler to deduct your home office
All entrepreneurs and small company owners who want to deduct rooms in their homes on their taxes will have it easier here soon. The IRS is simplifying the procedure.
The IRS reports that 3.4 million Americans deducted home offices as part of their taxes in 2010.
Working class individuals can only deduct office expenditures in a home, according to section 280A, if it is: "The principal place of business of a trade or business, as a place where you meet with patients, clients, or customers 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. Working class individuals seeking the deduction were (and still are, when filing a 2012 tax return) required to fill out the 43-line Form 8829 to calculate expenses and the portion of the home used for business. That process many found confusing and troublesome.
Taxpayers can take up to $1,500 in educations and $5 for every square foot of space for the deduction in 2014.
The Internal Revenue Service states the form will even be much simpler to understand and to fill out. The Internal Revenue Service states the move will save small business and entrepreneurs 1.6 million hours a year in paperwork and record keeping.
Every person happy about this
The National Association for the Self-Employed is pretty happy about the change, and so are others.
"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 deal with the situation.
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