The U.S. Department of the Treasury recently announced that the IRS will provide a streamlined process for claiming the home office tax deduction in 2013. Many small business owners who work from home and do qualify for the deduction don’t claim it because they find the provisions too complicated and confusing.
The IRS seeks to cut down on the paperwork required of small business owners, and to provide a “new, simpler option for calculating the home office tax deduction, allowing small business owners and employees who work from home and who maintain a qualifying home office to deduct up to $1,500 per year,” according to a Department of the Treasury blog post. The proposed change is expected to save taxpayers about 1.6 million hours of tax preparation time next year.
Once the new rules take effect, taxpayers will be able to deduct $5 per square foot of home office space, up to 300 square feet, or up to $1,500. The current form for claiming the home office deduction is 43 lines long, and demands a complicated process of measuring and calculation.
Deputy Secretary Neal S. Wolin and SBA Administrator Karen G. Mills describe the creation of a simpler version of the form as “part of broader efforts to make interacting with the federal government easier and more efficient for businesses of all sizes.”
More than half of working Americans work for or own a small business, and about half of small businesses are home-based. Although a less convoluted option for deducting home office space will benefit a significant number of business owners, those wishing to claim a deduction of more than $1,500 will likely still have to decipher the existing 43-line form.
Sources:
Mills, Karen G. and Neal S. Wolin. “Helping Small Business Owners and Home-Based Employees Claim the Home Office Tax Deduction.” U.S. Department of the Treasury, 1/15/13.
Tozzi, John. “Why You Might (Finally) Take the Home Office Tax Deduction.” Bloomberg Businessweek, 1/15/13.
