Home Office Rules Simplified? - Say It Isn't So!

The Internal Revenue Service announced it found a way to save the American people an estimated 1.6 million hours a year—quite possibly the nicest thing we've seen from the IRS since our refunds last year.If you’ve ever worked your way through the 43-line Form 8829 to compute a deduction for your office in home, you can understand it was a lot of work for a minimal deduction. Beginning with your 2013 return, the IRS offers a simplified option for owners of home-based businesses and qualified home-based employees to figure potential deductions for the business use of their homes.The latest statistics available from 2010 show nearly 3.4 million individual returns included a deduction for the business use of a home (fondly known as the home office deduction).The new alternative computation method basically enables you to multiply a standard rate of $5 per square foot times the dedicated business floor space, to a maximum of 300 square feet. Above that area the traditional method will still be required."This is a common-sense rule to provide taxpayers an easier way to calculate and claim the home office deduction," announced Acting IRS Commissioner Steven T. Miller. "The IRS continues to look for similar ways to combat complexity and encourages people to look at this option as they consider tax planning in 2013." Thanks for doing something that Congress has yet to master—simplification.This new, simplified form won’t be for everyone. Eligible homeowners won’t be able to depreciate the business portion of their home, but they can still claim all of their allowable mortgage interest, real estate taxes and casualty losses on the home with their Schedule A itemized deductions. Using the new method will mean these deductions won’t need to be allocated between personal and business use, as the regular method requires.All of the other requirements, that the space must be used regularly and exclusively for business and limited to income derived from the particular business, will apply under both methods.You can look forward to all the extra time you’ll have next year!  Meanwhile, if we can help don’t hesitate to get in touch:  office@CPAsite.com or 904-396-5400.