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IRS Announces Simplified Home Office Deduction Option

Submitted by admin on Wed, 1/16/2013 - 12:00 am

The IRS has announced a simplified method to claim the home office deduction as an alternative option beginning this year. In 2010, nearly 3.4M taxpayers claimed deductions for the business use of their home or residence.

This new options provides taxpayers an easier path to calculating and claiming this deduction. The new option will be capped at $1,500 per year based on $5 per square foot of office space used in the home, up to a 300 square foot maximum. Taxpayers electing this option will complete a significantly more simplified form.

Homeowners using the new option cannot depreciate the portion of the home used in trade or business, although they can claim allowable mortgage interest and real estate taxes as itemized deductions on Schedule A. These deductions do not need to be allocated between personal and business use as required under the standard option.