Working class individuals who work out of their homes have found it hard 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 IRS states that process will be simplified and less cumbersome when filing taxes next year.
Looking at a deduction for your home
All entrepreneurs and small business owners who want to deduct rooms in their homes on their taxes will have it easier here soon. The Internal Revenue Service is simplifying the procedure.
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 customers in the normal course of your business, or your work as an employee, but only if the use of the home office is for the benefit of your employer."
Used to be too difficult
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 procedure many found confusing and troublesome.
In 2014, it will be much less with $5 per square foot of room and up to 300 square feet.
The Internal Revenue Service states the form will also be much simpler to understand and to fill out. The Internal Revenue Service claims the move will save small company and entrepreneurs 1.6 million hours a year in paperwork and record keeping.
Quite a bit of good news
A trade group for entrepreneurs, The National Association for the Self-Employed, had enthusiastic 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.
Looking at a deduction for your home
All entrepreneurs and small business owners who want to deduct rooms in their homes on their taxes will have it easier here soon. The Internal Revenue Service is simplifying the procedure.
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 customers in the normal course of your business, or your work as an employee, but only if the use of the home office is for the benefit of your employer."
Used to be too difficult
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 procedure many found confusing and troublesome.
In 2014, it will be much less with $5 per square foot of room and up to 300 square feet.
The Internal Revenue Service states the form will also be much simpler to understand and to fill out. The Internal Revenue Service claims the move will save small company and entrepreneurs 1.6 million hours a year in paperwork and record keeping.
Quite a bit of good news
A trade group for entrepreneurs, The National Association for the Self-Employed, had enthusiastic 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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