Working class individuals who work out of their homes have found it difficult previously to calculate their home office deduction for the Internal Revenue Service. Additionally, the deduction is well-known for raising red-flags with the tax agency. However, the Internal Revenue Service says that procedure will be simplified and less troublesome when filing taxes next season.
Looking at a deduction for your home
The process of deducting a room as an office in a home is really complicated, according to the Internal Revenue Service. That is why the procedure will be simplified.
There were 3.4 million Americans in 2010 who deducted a home office on their taxes.
Taxpayers can only deduct office expenditures in a home, according to section 280A, 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 an employee, but only if the use of the home office is for the benefit of your employer."
Simplifying the process
Working class individuals had to fill out the 43-line Form 8829 to determine what part of the home is really deducted for the business. This was really complicated and took a ton of work.
In 2014, those calculations will be made easier. Working class individuals can claim $5 for every square foot of the space for up to 300 square feet, or $1,500.
The Internal Revenue Service claims the form will also be much easier to understand and to fill out. The IRS states the move will save small business and entrepreneurs 1.6 million hours a year in paperwork and record keeping.
A ton of happy campers
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 changes will be put on 2013 returns filed in early 2014.
Looking at a deduction for your home
The process of deducting a room as an office in a home is really complicated, according to the Internal Revenue Service. That is why the procedure will be simplified.
There were 3.4 million Americans in 2010 who deducted a home office on their taxes.
Taxpayers can only deduct office expenditures in a home, according to section 280A, 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 an employee, but only if the use of the home office is for the benefit of your employer."
Simplifying the process
Working class individuals had to fill out the 43-line Form 8829 to determine what part of the home is really deducted for the business. This was really complicated and took a ton of work.
In 2014, those calculations will be made easier. Working class individuals can claim $5 for every square foot of the space for up to 300 square feet, or $1,500.
The Internal Revenue Service claims the form will also be much easier to understand and to fill out. The IRS states the move will save small business and entrepreneurs 1.6 million hours a year in paperwork and record keeping.
A ton of happy campers
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 changes will be put on 2013 returns filed in early 2014.
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