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.