If you're one of the more than 3.4 million taxpayers claimed
deductions for business use of a home (commonly referred to as the home office
deduction), you might be interested in the new simplified option available for
taxpayers starting with the 2013 return most taxpayers file early in 2014.
The new optional deduction, recently announced by the IRS,
is capped at $1,500 per year based on $5 a square foot for up to 300 square
feet. It is expected to reduce the paperwork and recordkeeping burden on small
businesses by an estimated 1.6 million hours annually.
Currently, taxpayers claiming the home office deduction are
generally required to fill out a 43-line form (Form 8829) often with complex
calculations of allocated expenses, depreciation and carryovers of unused
deductions. Taxpayers claiming the optional deduction will complete a
significantly simplified form.
Though homeowners using the new option cannot depreciate the
portion of their home used in a trade or business, they can claim allowable
mortgage interest, real estate taxes and casualty losses on the home as
itemized deductions on Schedule A. These deductions need not be allocated
between personal and business use, as is required under the regular method.
Business expenses unrelated to the home, such as advertising, supplies and
wages paid to employees are still fully deductible.
Current restrictions on the home office deduction, such as
the requirement that a home office must be used regularly and exclusively for
business and the limit tied to the income derived from the particular business,
still apply under the new option.
If you need more details about the new simplified home
office deduction for tax year 2013, don't hesitate to give us a call. We're
here to help
visit us at: www.scoresouthflorida.net