Home Office Deduction Safe Harbor

This simplified option does not change the criteria for who may claim a home office deduction. Calculating the home office deduction can be done one of two ways. If you choose to use this method you cannot claim home office expenses using the regular method explained above.

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Here are the details of this simplified method.

Home office deduction safe harbor. This new safe harbor option allows taxpayers with a qualified home office to deduct 5 00 per square foot up to a maximum of 1 500 so the maximum allowable area of the home office is 300 square. Jackie perlman march 13 2020. A faster easier deduction. Self employed taxpayers should run the numbers both ways the safe harbor calculation and the traditional method to determine the home office deduction.

Money taxes business taxes new safe harbor for claiming the home office deduction. It merely simplifies the calculation and. So the irs has a much simpler option for figuring a home office deduction. Safe harbor home office deduction simplified method this is a simplified method for figuring your home office deduction.

The deduction is 5 per square foot with a maximum square footage of 300. The official irs name for the new method is the safe harbor method. The safe harbor home office deduction. Effective for tax years beginning in 2013 taxpayers can elect a simplified deduction safe harbor home office deduction for the business use of the taxpayer s home.

Thus the maximum deduction is 1 500 per year. 2020 01 09 starting for tax years 2013 and afterwards taxpayers will be able to use a simplified form which the irs has not published yet for claiming the home office deduction where the irs will simply allow the business owner to claim a safe harbor amount equal to 5 multiplied by the number of. Easier may not be better. Requirements to claim the home office deduction.

It grants a standard deduction of 5 per square foot of the home used for business purposes up to a maximum of 300 square feet or a 1 500 max deduction. To use the safe harbor method taxpayers must continue to satisfy all the other requirements for a home office deduction including that the space be used exclusively for the qualified business purpose and that an employee qualifies for the deduction only if the office is for the convenience of the taxpayer s employer. The simplified method doesn t change who can claim it but it does simplify your calculations and records. Beginning in tax year 2013 returns filed in 2014 taxpayers may use a simplified option when figuring the deduction for business use of their home.

Generally when using the regular method deductions for a home office are based on the percentage of your home devoted to business use. So if you use a whole room or part of a room for conducting your business you need to figure out the percentage of your home devoted to your business activities. To use the safe. The actual expense method under which the home office deduction amount is based on the actual expenses related to the use of the home office incurred by the taxpayer or the new safe harbor method under which the deduction amount is determined by a formula based on the square.