Working class individuals who work out of their homes have found it difficult in the past to determine their home office deduction for the Internal Revenue Service. In addition, the deduction is well-known for raising red-flags with the tax agency. However, the Internal Revenue Service states that process will be simplified and less cumbersome when filing taxes next season.
Looking at a deduction for your home
All entrepreneurs and small company owners who want to deduct rooms in their homes on their taxes will have it easier here soon. The IRS is simplifying the process.
In 2010, the most recent years statistics are accessible for, 3.4 million Americans claimed deductions for home offices, according to the IRS.
The tax code section 280A claims that a taxpayer can only count the room as a deduction if it is: “The principal place of business of a trade or business, as a place where you meet with patients, clients, or customers in the normal course of your business, or your work as a worker, but only if the use of the home office is for the benefit of your employer.”
Simplifying the procedure
It used to be that people would spend hours filling out Form 8829 in order to figure out how much of the home could possibly be deducted from taxes. It was a long process.
In 2014, it will be much less with $5 per square foot of room and up to 300 square feet.
The IRS feels accomplished and like it has saved working class individuals millions of hours of complicated paperwork with the change.
Every person happy over it
The National Association for the Self-Employed is pretty happy about the change, and so are others.
“This is terrific news for the 52 percent of all small business that work from home, who fight every day to meet their bottom lines while continuing to contribute to the economy,” said Kristie Arslan, who heads the group. “The previous calculation for the deduction was cumbersome and time consuming for America’s smallest business and year after year hard-earned dollars were left on the table.”
The first returns to include the change will be 2013 returns filed in 2014.
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