Tuesday, February 5, 2013

IRS makes it easier to file Tax Deductions if you Own a Home-Based Business.

I'm excited to announce that soon it will be a whole lot easier to claim a federal tax deduction if you own a home-based business. The IRS has created a new "significantly simplified" form to figure out what to claim for business use of your home office that you can use starting next year. 

This will replace the 43-line form that's now used to fill out the so-called "home office deduction."
The change applies to 2013 incomes taxes to be filed next year. The new option will reduce record-keeping and paperwork by a whopping 1.6 million hours a year and will be capped at $1,500 per year says the IRS. 

Also I should mention the following:
  • The deduction is based on $5-per-square-foot for up to 300 square feet of home office space.
  • Existing rules, such as requirement that a home office must be used exclusively for business, still apply under the new option.

I think these new changes will ease tax preparation headaches for millions. 

New Form (example; not IRS document)

Not sure if any of you filled out the previous form , but just to show you how simpler the new form is compared to the old form, look below to see what was included in the old form:

  • One page long, with 43 lines;
  • The words “see instructions” appears 17 times;
  • There are four pages of instructions;
  • Part III must be completed before Part II can be completed.
*The NASE estimates that nearly half of the 9 million home-based businesses do not elect to complete the IRS Form 8829 (Standard Deduction for Expenses for Business Use of Your Home) due to the complex nature of the instructions.

Read more here: http://blogs.sacbee.com/personal-finance-ask-the-experts/2013/01/home-based-businesses-irs-forms-to-file-for-tax-deduction.html#storylink=cpy

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