Working class individuals who work out of their homes have found it challenging previously to determine their home office deduction for the Internal Revenue Service. Additionally, the deduction is well-known for raising red-flags with the tax bureau. However, the IRS says that procedure will be made easier and less troublesome when filing taxes next year.
Looking at a deduction for your home
The Internal Revenue Service 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.
The tax code section 280A says that a taxpayer can only count the room as a deduction if it is: "The principal place of business of a trade or business, as a place where you meet with patients, clients, or consumers in the normal course of your business, or your work as a worker, but only if the use of the home office is for the convenience of your employer."
Making it easier
It used to be that people would spend hours filling out Form 8829 in order to figure out how much of the home could be deducted from taxes. It was a long procedure.
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.
Smaller businesses and entrepreneurs will save millions of hours in paperwork by making the change, which the IRS is happy about.
Nice to know there is change
The National Association for the Self-Employed is pretty happy about the change, and so are others.
"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 first returns to incorporate the change will be 2013 returns filed in 2014.
Looking at a deduction for your home
The Internal Revenue Service 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.
The tax code section 280A says that a taxpayer can only count the room as a deduction if it is: "The principal place of business of a trade or business, as a place where you meet with patients, clients, or consumers in the normal course of your business, or your work as a worker, but only if the use of the home office is for the convenience of your employer."
Making it easier
It used to be that people would spend hours filling out Form 8829 in order to figure out how much of the home could be deducted from taxes. It was a long procedure.
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.
Smaller businesses and entrepreneurs will save millions of hours in paperwork by making the change, which the IRS is happy about.
Nice to know there is change
The National Association for the Self-Employed is pretty happy about the change, and so are others.
"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 first returns to incorporate the change will be 2013 returns filed in 2014.
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