IRS simplifies home-office deduction
When home-based business owners file their 2013 taxes, it will be easier to deduct the use of their domicile, the IRS and the National Association for the Self-Employed announced yesterday.
Currently, claiming the tax credit on Form 8829 intimidates many business owners, says the NASE. The four-part form has 43 lines of complex calculations that factor in allocated expenses, depreciation and business gains and losses.
Starting with tax year 2013, the IRS will release a simpler form that streamlines the process, saving taxpayers an estimated 1.6 million hours of paperwork. It will allow home-based businesses or employees who telecommute to deduct $5 a square foot on up to 300 square feet. The maximum credit is $1,500.
“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, president and CEO of NASE, which lobbied hard for improvements to the home-office deduction. 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.
"I applaud the Treasury Department and the Small Business Administration for working together to adopt a common-sense solution to a long-standing problem the self-employed community has faced for years.”