News in Brief, March 2013

IRS Simplifies the Home Office Deduction

This Will Save Taxpayers 1.6 Million Hours per Year

In 2010, the most recent year for which figures are available, nearly 3.4 million taxpayers claimed deductions for business use of a home, which is more commonly referred to as the “home office deduction.” Many direct sellers take advantage of this tax savings, saving monthly phone and utility bills in order to accurately fill out the often complicated 43-line form (Form 8829).

Beginning in early 2014 for the filing of 2013 taxes, the IRS is presenting a simplified option that many owners of home-based businesses may use instead of the current form, with its depreciations and carryovers. The simplified plan allows a capped total of a $1,500 deduction per year, and does not require all the paperwork and recordkeeping demanded by the current form. The IRS estimates that small businesses will save close to 1.6 million hours annually by using the new option.

The deduction amount is based on $5 a square foot for up to 300 square feet, which is an average size for a home office. Other business expenses unrelated to the home, such as advertising and supplies, are still fully deductible.

Acting IRS Commissioner Steven Miller says, “The option is a common sense rule to provide taxpayers an easier way to calculate and claim the home office deduction.”

For more information, visit www.irs.gov.

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IRS Announces Simplified Option for Home Office Deductions

 

According to a new report on the IRS website, the Internal Revenue Service announced a simplified option that many owners of home-based businesses and some home-based workers may use to figure their deductions for the business use of their homes. This is potentially great news for millions of U.S.-based direct selling professionals.

In tax year 2010, the most recent year for which figures are available, nearly 3.4 million taxpayers claimed deductions for business use of a home (commonly referred to as the home office deduction).

The new optional deduction, capped at $1,500 per year based on $5 a square foot for up to 300 square feet, will reduce the paperwork and recordkeeping burden on small businesses by an estimated 1.6 million hours annually. The simplified option takes effect in the year 2013, and can be claimed on forms filed in 2014.

The entire article can be found here.