The Internal Revenue Service has made a new option for how to calculate your home office space deduction that is easier than it has been in the past. Yes, that’s right, the IRS made something easier.
Many small-business owners have a love-hate relationship with the home-office deduction. It can be a great way to shave away at the amount of income you have to pay taxes on. It is also a 43-line bear of a tax form (form number 8829 for the self-employed) to fill out, rife with opportunities to report something incorrectly and flag yourself for the ever-dreaded audit.
But this week the IRS announced that for the 52 percent of small-business owners with an at-home work space, the deduction can be equal to $5 per square foot of home office space on up to 300 square feet for a maximum deduction of $1,500 per year.
The first year this option will be available is for the 2013 tax year, so you will have one more year of that dreaded 43-line form.
The IRS says that the change in tax-preparing rules is expected to save small-business owners more than 1.6 million hours each year, according to a blog post jointly written by Treasury Deputy Secretary Neal S. Wolin and Small Business Administration Chief Karen G. Mills. The move is part of a larger effort by the Office of Information and Regulatory Affairs to reduce paperwork burdens.
What has your experience been like deducting your home-office expenses on your tax form in years past? Will this make your life easier? Leave a comment below and let us know.