IRS: It will be easier to claim the home office deduction

IRS: It will be easier to claim the home office deduction If your home office is your main place of work and business, you can claim the deduction when you file your taxes, but the filling out process...

IRS: It will be easier to claim the home office deduction If your home office is your main place of work and business, you can claim a deduction when filing your tax return, but filling it out is quite complicated and is most likely to attract special attention from the reviewer. The Internal Revenue Service (IRS) recently announced that in order to make the process easier for both the IRS and taxpayers, it will provide a new option in 2014 for people to fill out their 2013 tax forms. Currently, taxpayers who want to claim a home office deduction must fill out a separate form to clearly indicate the percentage of the home used solely for business and office expenses, which can be complicated to figure out. But starting in 2014, you won't have to do these calculations anymore. Instead, the new option allows you to declare an office fee of $5 per square foot, up to a maximum of 300 square feet. This simplified form would allow a cap on deductions of $1,500 per year. "This will make it easier for the IRS and most taxpayers who claim this deduction," the certified public accountant said. It also encourages many people who are intimidated by the complexity of claiming the deduction to start filing. He also said the new deduction options are less likely to trigger audits because of simplified forms and processes. But those who typically claim more than $1,500 as a home office deduction (often where their rent is very high or a large portion of their home is used as an office) may have to continue using the current, more complicated method of filing their taxes. The IRS says 3.4 million taxpayers claimed the home office deduction in 2010. The new option is estimated to save small businesses approximately 1.6 million hours annually due to reduced recordkeeping and paperwork. The IRS's announcement was cheered by some of America's smallest businesses, where previous deductions had been cumbersome and time-consuming to calculate and claims could have been denied.