​IRS Home Office Deductions To Apply For 2013​​

By: | 01/28/2013 06:27 PM ET
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The IRS is making it easier for small-business owners who need home office deductions by using a new “significantly simplified” form next year to figure out what to claim will be, instead of today’s 43-line form.

The home office deduction change applies to 2013 income taxes to be filed next year, not those filed this April.

The IRS said the new option, capped at $1,500 per year, will reduce the paperwork and record-keeping burden on small businesses by 1.6 million hours a year. 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.

It could ease tax preparation headaches for millions. In tax year 2010, the most recent data available, the IRS said nearly 3.4 million taxpayers claimed deductions for home-based businesses.

The definition of what qualifies as a home office has not changed. That means, the office must be used as your principal place of business. It must be used “regularly and exclusively” for business and cannot double up as a place that you use for business as well as personal purposes.

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