Simplified Home Office Expense Deduction

If you run a home based business you may be eligible to expense the use of home office space and reduce your tax burden.

Simplified home office expense deduction. Standard deduction of 5 per square foot of home used for business maximum 300 square feet. Original home office deduction. Using the optional method you simply deduct 5 for every square foot of your home office. Highlights of the simplified option.

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. It merely simplifies the calculation and recordkeeping requirements of the allowable deduction. Simplified home office deduction. Fill out the 43 line form 8829 to claim a deduction.

This simplified option does not change the criteria for who may claim a home office deduction. You need to make sure you meet one or more of these requirements. Feet x 5 as a home office deduction. The simplified home office deduction can be claimed starting in tax year 2013.

How to deduct your home office without an audit. Your deduction would be 2 000 meaning that you have just saved 2 000 by claiming a home office expense deduction. You have two options for deducting your home office. Why is the simplified method being offere.

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. Fill out a six line page. What is the simplified method for determining the home office deduction. 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.

Since 2013 the irs has even offered a simplified method in addition to the regular business percentage method to determine the home office deduction. For example if your home office is 250 square feet the simplified option for the home office deduction would allow you to claim 1 250 250 sq. However the deduction is capped at 1 500 per year.