Simplified Home Office Deduction
If you’re one of the more than 3.4 million taxpayers claimed deductions for business use of a home (commonly referred to as the home office deduction), don’t forget about the simplified home office deduction option that is now available for taxpayers.
The optional home office deduction is capped at $1,500 per year based on $5 a square foot for up to 300 square feet. It is expected to reduce the paperwork and recordkeeping burden on small businesses by an estimated 1.6 million hours annually.
Currently, taxpayers claiming the home office deduction are generally required to fill out a 43-line form (Form 8829) often with complex calculations of allocated expenses, depreciation and carryovers of unused deductions. Taxpayers claiming the optional home office deduction will complete a significantly simplified form.
Though homeowners using the new home office deduction option cannot depreciate the portion of their home used in a trade or business, they can claim allowable mortgage interest, real estate taxes and casualty losses on the home as itemized deductions on Schedule A. These deductions need not be allocated between personal and business use, as is required under the regular method. Business expenses unrelated to the home, such as advertising, supplies and wages paid to employees are still fully deductible.
Current restrictions on the home office deduction, such as the requirement that a home office must be used regularly and exclusively for business and the limit tied to the income derived from the particular business, still apply under the new option.
If you need more details about the new simplified home office deduction for tax year 2014 (or 2015), don’t hesitate to call.
Website www.HubCFO.com
Blog www.Blog.HubCFO.com
Twitter https://twitter.com/HubCFO_LLC
LinkedIn https://www.linkedin.com/company/hubcfo
Facebook https://www.facebook.com/Hub-CFO
Google+ https://plus.google.com/+Hubcfo