IRS simplifies deduction for home office in 2013

home office

Deducting a home office as a place of business for income tax purposes — traditionally a red flag-raiser for the IRS — will be a whole lot simpler for taxpayers filing in 2014. Image: rintakumpu/Flickr/CC BY

Taxpayers who want to claim deductions for their home offices — a move that is notorious for raising red flags with the The Internal Revenue Service — will find an easier go of it under the revised tax code for 2013.

Home office deduction made easier

The IRS said Tuesday, January 15, that it will be simplifying the process for entrepreneurs and small business to deduct rooms in their homes as a place of business this year.

In 2010, the most recent years statistics are available for, 3.4 million Americans claimed deductions for home offices, according to the IRS.

Section 280A of the tax code allows taxpayers to deduct expenses for an office in a private home if the room is: “The principal place of business of a trade or business, as a place where you meet with patients, clients, or customers in the normal course of your business, or your work as an employee, but only if the use of the home office is for the convenience of your employer.”

Once cumbersome process simplified

However, in previous years, that was easier said than done. Taxpayers seeking the deduction were (and still are, when filing a 2012 tax return) required to fill out the 43-line Form 8829 to calculate expenses and the portion of the home used for business.That process many found confusing and cumbersome.

In 2014, those calculations will be made simpler. Taxpayers can claim $5 for every square foot of the space for up to 300 square feet, or $1,500.

The IRS says the form will also be much easier to understand and to fill out. The IRS says the move will save small business and entrepreneurs 1.6 million hours a year in paperwork and record keeping.

Praise for the tax code change

A trade group for entrepreneurs, The National Association for the Self-Employed, had enthusiastic words for the tax code upgrade. “This is terrific news for the 52 percent of all small business that work from home, who fight every day to meet their bottom lines while continuing to contribute to the economy,” said Kristie Arslan, who heads the group. “The previous calculation for the deduction was cumbersome and time consuming for America’s smallest business and year after year hard-earned dollars were left on the table.”

The changes will be applied to 2013 returns filed in early 2014.


Dallas News

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