Home Office Deduction Simplified Vs Regular

It merely simplifies the calculation and recordkeeping requirements of the allowable deduction. 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. What is the simplified method for determining the home office deduction.

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Standard deduction of 5 per square foot of home used for business maximum 300 square feet.

Home office deduction simplified vs regular. Deciding whether to use the simplified method or regular method when claiming the home office deduction depends on the size of your home office and the calculations you want to make. If your workspace is less than the maximum 300 square foot area covered under the simplified method your deduction will be less. Many home based businesses will be able to benefit from a new simplified method of claiming the home office deduction starting with the 2013 tax returns. This simplified option does not change the criteria for who may claim a home office deduction.

Since 2013 the irs has even offered a simplified method in addition to the regular business percentage method to determine the home office deduction. Whether you use the regular method or the simplified method the irs has a few requirements for claiming the home office tax deduction. So it can only be used for offices up to 300 square feet. For some small business owners the difference in the deduction isn t worth the extra paperwork and record keeping that come with the regular method.

Say you use a den or spare bedroom at home as your home office and. The simplified home office deduction can be claimed starting in tax year 2013. Using the optional method you simply deduct 5 for every square foot of your home office. Why is the simplified method being offere.

If you spend most of your work hours in a commercial office while performing just a fraction of your work in a home office you. If you use a portion of your home exclusively for business purposes on a regular basis you may qualify for the deduction. However the deduction is capped at 1 500 per year. This applies to both homeowners and renters as well as all types of homes.

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. For example if you have an office space of 150 square feet and your home is 1200 square feet you are under the maximum of 300 square feet for the simplified deduction so you have the option of taking either the simplified or the regular deduction. Highlights of the simplified option. First your home office must be the primary place in which you run your business.

The qualifications for the simplified home office deduction are the same as the regular home office deduction. You can claim a deduction of up to 1 500 using the simplified form provided you meet the stringent regular and exclusive use requirements.