A Simplified Home
Office Deduction
Do you work at home
or have a home-based business? If so, you should be aware that the IRS has
created a simpler option for calculating the deduction for the business use of
your home. The new option makes recordkeeping easier because, instead of
maintaining records of specific home office expenses, you can use a standard
rate per square foot. The rate is $5 per square foot (up to a maximum of 300
sq. feet or $1,500) for qualifying business use space in place of taking a pro
rata percentage of items such as mortgage interest, taxes and repairs.
Keep in mind there
are good and bad aspects to this “simpler” method. The new method gives you
back your full interest and tax deduction on schedule A, but you will lose your
depreciation and loss carryover deductions. Of course, you must still use your
home office regularly and exclusively for business. This may be a welcome
relief for some taxpayers, but it might not be the best choice for others. Is
it the right choice for you? Please contact us for answers to all your
financial questions.
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