Simplified Home Office Deduction Calculations

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The IRS has introduced a new simplified system for calculating the home office deduction.  Beginning with the filing of the 2013 tax returns (in 2014), taxpayers will be able to claim $5 per square foot for a home office deduction.  This simplified method is limited to a maximum deduction of 300 feet or $1,500.    If taxpayers decide to take advantage of this new method, they will be able to complete a much simpler form from the current 43 line Form 8829.

The new simplified method does not reduce the eligibility requirements for determining if taxpayers qualify to take a home office deduction.  This change just simplifies the record keeping requirements and calculations for deducting a home office.

With the new option, taxpayers will not have to break out the mortgage interest or property tax portion of their home office.  They will still be allowed to take 100% of these deductions on Schedule A.  The new simplified system does not permit the taxpayer to claim any depreciation for the use of a home office.

If you have any questions, please contact our office.

 

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