Home Office Deduction

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Home Office Deduction Simplified... Sort of

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Every now and then the government does actually simplify something. On Tuesday, January 15, 2013 the IRS released Revenue Procedure 2013-13 which gives you an optional method to calculate the amount of the deduction for expenses for your business use of your residence beginning with the current tax year.

As you read about this new home office deduction option, you may notice that it is very similar to the options you have for deducting business use of your automobile. One method is easy and based on a constant deduction the IRS provides the other method requires that you keep detailed records but the benefit may well be a higher deduction.

New Option Beginning with 2013

Beginning this year, 2013, you can elect to calculate your home office deduction by multiplying the allowable business square footage by $5.00. The allowable square footage is the portion of the house used in a qualified business use, but not to exceed 300 square feet. The maximum you can deduct annually under this new “safe-harbor” calculation method is $1,500. The IRS may update the $5.00 per foot allowance from time to time.

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How to get your home office deduction

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Have you wondered whether or not you’re entitled to a home office deduction? With tax time here again maybe you should take another look.

A few years back, more liberal rules came into play for home office deductions, allowing more people to qualify for the write-off. Specifically, the old, hard-to-meet “principal place of business” bar was lowered to a much more taxpayer-friendly level.

If you use your home office space regularly and exclusively for your sole proprietorship, LLC or partnership business, there are several ways to qualify for the deduction: