IRS Offers Simplified Home Office Deduction for 2013
The IRS has announced an easier way for taxpayers to claim the home office deduction in 2013. Now taxpayers can simply calculate their deduction at $5 per square foot of home office, up to 300 square feet. Previously, taxpayers had to keep track of utilities, repairs and maintenance, homeowner’s insurance and all the other costs associated with a home, allocate those costs and their mortgage interest and taxes between personal and business use, and calculate depreciation on their home office. Additionally, under the new method taxpayers can claim all of their mortgage interest and real estate taxes paid as itemized deductions on Schedule A, even if they claim the home office deduction. The home office must still be used regularly and exclusively for business, as was previously required. The requirement that the taxpayer’s business must have sufficient income to absorb the deduction also still applies. Contact us if you want help determining which approach would be more advantageous for your situation.