What Is The Simplified Method For Home Office Deduction

How to calculate the home office deduction simplified method To calculate the deduction with the simplified method you will multiply your clients total home office space by the rate per square foot for the current tax year. This applies to both homeowners and renters as well as all types of homes.

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If you use a portion of your home exclusively for business purposes on a regular basis you may qualify for the deduction.

What is the simplified method for home office deduction. Using the optional method you simply deduct 5 for every square foot of your home office. The deduction is capped at 1500 per year so the maximum space you can claim is. For instance you might choose the actual expense method on your 2018 return use the simplified method when you file your 2019 return next year and then switch back to the actual expense method thereafter.

The simplified method takes the square footage of your home office with a maximum of 300 square feet and multiplies it by a rate prescribed by the IRS. The standard method has some calculation allocation and substantiation requirements that are complex and burdensome. The maximum deduction under this method is 1500.

So it can only be used for offices up to 300 square feet. This simplified option does not change the criteria for who may claim a home office deduction. You receive a standard deduction of 5 per square foot up to 300 square feet the deduction cant exceed 1500.

If you meet the criteria above youll have two choices for calculating the deduction. You receive a standard deduction of 5 per square foot up to 300 square feet the deduction. For anyone who wants to claim the simplified home office deduction the IRS allows you to claim a deduction thats based on the square footage of your office.

For example if you have an office space of 150 square feet and your home is 1200 square feet you are under the maximum of 300 square feet for the simplified deduction so you have the option of taking either the simplified or the regular deduction. When using the regular method deductions for a home office are. For taxable years starting on or after January 1 2013 filed beginning in 2014 you now have a simplified option for computing the home office deduction IRS Revenue Procedure 2013-13 January 15 2013.

It merely simplifies the calculation and recordkeeping requirements of the allowable deduction. The simplified method and the actual expense method. Many home-based businesses will be able to benefit from a new simplified method of claiming the home office deduction starting with the 2013 tax returns.

The home office deduction. When claiming the home office deduction youre not locked into a particular method. The simplified method lives up to its namesake by offering an easier and simpler way to calculate the home office tax deduction.

The simplified method for determining the home office deduction is fairly straightforward. The simplified method as announced in Revenue Procedure 2013-13 PDF is an easier way than the method provided in the Internal Revenue Code the standard method to determine the amount of expenses you can deduct for a qualified business use of a home. If you run your business from your home or perform certain functions at home that are related to your business you might be able to claim a home office deduction against your business income on your 2018 income tax return.

The simplified method for determining the home office deduction is fairly straightforward. The simplified option has a rate of 5 a square foot for business use of the home. If you use the simplified home office deduction method theres no need for Form 8829.

To determine your home office deduction under the simplified method you would deduct 5 for every square foot of the space you have designated as a home office. If you want to use the simplified method your deduction is 5 x 150 sq. You can claim a deduction of up to 1500 using the simplified form provided you meet the stringent regular and exclusive use requirements.

How to use the simplified home office deduction. The qualifications for the simplified home office deduction are the same as the regular home office deduction. It can only be used for office spaces of up to 300 square feet meaning your deduction can be a maximum of 1500 per year.

You can still claim this deduction on Schedule A if you itemize. Beginning in tax year 2013 returns filed in 2014 taxpayers may use a simplified option when figuring the deduction for business use of their home. Under the simplified method youll receive a deduction of 5 per square feet of home office space with a maximum of 300 square feet.

As this article is published the rate is 5 per square foot for up to 300 square feet of home office space. Its worth 5 for every square foot that makes up your office space. However the deduction is capped at 1500 per year.

The maximum size for this option is 300 square feet. What Is the Simplified Method. The simplified home office deduction can be claimed starting in tax year 2013.

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