Home Office Deduction Safe Harbor Rules

If you operate from home these costs are part of a home office deduction. 4 traditionally the sec. Like many other types of tax deductions the home office deduction comes with multiple rules and best practices.

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Calculating the home office deduction can be done one of two ways.

Home office deduction safe harbor rules. The tax rules on how to write off office expense deductions can be confusing. 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. For a full explanation of tax deductions for your home office refer to publication 587 business use of your home. In this publication you will find.

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. 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. The irs has announced a new optional safe harbor method effective for tax years beginning on or after january 1 2013 for individuals to determine the amount of their deductible home office expenses ir 2013 5 rev. Ft as a home office deduction.

The new alternative is a simplified method in which the taxpayer multiplies. 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. 2013 13 being hailed by many as a long overdue simplification option taxpayers may now elect to determine their home office deduction by simply multiplying a prescribed. Requirements for qualifying to deduct expenses including special rules for storing inventory or product samples.

The safe harbor deduction is limited to 1 500 per year which means the. A taxpayer can claim a home office deduction for the year based on 5 per square foot of his or her home office. 280a home office deduction requires complex computations and allocations and burdensome recordkeeping. It merely simplifies the calculation and.

Depending on whether you own or lease your office space you can deduct your rent or mortgage interest costs. In this publication you will find. This simplified option does not change the criteria for who may claim a home office deduction. Starting with the 2013 tax year the irs is offering a safe harbor alternative to the home office deduction individual taxpayers can claim.

Thus someone with a home office of 200 square feet would claim 1 000 200 sq. Safe harbor rule the new rule is simple. With nearly 40 percent of the american workforce working from home at least part of the time many people wonder about the potential benefit of home office deductions and if anything has changed since the passage of the tax cuts and jobs act tcja. Here s what you need to know.