Home Office Deduction Simplified Method

Your deduction would be 2 000 meaning that you have just saved 2 000 by claiming a home office expense deduction.

Home office deduction simplified method. However the deduction is capped at 1 500 per year. It merely simplifies the calculation and recordkeeping requirements of the allowable deduction. It just changes the way the deduction is calculated. Fortunately there s a simplified method that s been available since 2013.

The simplified home office deduction can be claimed starting in tax year 2013. Say you use a den or spare bedroom at home as your home office and. You can deduct 5 for each square foot of home office space up to a maximum total of 1 500. Standard deduction of 5 per square foot of home used for business maximum 300 square feet.

The simplified method as announced in revenue procedure 2013 13 is an easier way than the method provided in the internal revenue code the standard method to determine the amount of expenses you can deduct for a qualified business use of a home. The easiest way to calculate your home office tax deduction is called the simplified method the irs allows taxpayers to deduct 5 per square foot up to 300 square feet of home used in. For example if you ve converted a 300 square foot bedroom to an office you use exclusively and regularly for business you can write off 1 500 under the simplified. This simplified option does not change the criteria for who may claim a home office deduction.

What is the simplified method for determining the home office deduction. For example let s say your total allowable indirect home expenses for your whole home are 20 000 for a specific year and your home office space is 10 of your home for business purposes. Follow along as we walk you through the basics of the home office tax deduction and help you figure out which method works best for your home business. So it can only be used for offices up to 300 square feet.

You receive a standard deduction of 5 per square foot up to 300 square feet the deduction can t exceed 1 500. The simplified deduction doesn t have anything to do with your ability to qualify for a home office deduction. If your workspace is less than the maximum 300 square foot area covered under the simplified method your deduction will be less. Owners of home based businesses now have a second simpler way to calculate the deduction for the home office space.

Using the optional method you simply deduct 5 for every square foot of your home office. Why is the simplified method being offere.