If you work from home, you should be aware of home office deductions. In 2013, a simpler option to calculate deductions for your home business was introduced by the IRS. The new option saves you time because it makes calculating and claiming the deduction easier.
Additionally, record keeping is easier too. However, the rules on who is eligible to claim this deduction remain the same. Today, we are discussing what the IRS has released about the home office deduction.
- In order to qualify for this deduction, you must have a specific area in your home that is used regularly and exclusively for business. It must be your primary business location, a meeting place for clients and/or customers, or a section that is not attached to your home
- When using the actual expense method, it includes certain fees paid for your house. For example, a portion of your rent may qualify, a portion of your mortgage interest, or your taxes and utilities. The amount is going to vary depending on the space that you use for business.
- For 2014 tax returns, you can use the simplified option instead of claiming the actual expense. This method allows you to use the square footage of your office at the rate of $5 per square foot. The maximum amount allowed is 300 square feet and it caps off at $1,500.
- In the event that your income made is less than your home expenses, you will have a limited amount of expenses that can be deducted.
- If you prefer the actual expense method, file Form 8829, to come up with your deduction amount. Alternatively, you can file Schedule C.
- Employees have to meet additional guidelines to be eligible for the deduction. In addition to meeting the above requirements, your business must be for your employer’s convenience.
We recommend that you file your taxes with TurboTax. By doing so you can make sure that, you are deducting the correct amount for your home business, to reduce your risk of being audited.
Additionally, Turbo Tax makes sure that you pay the least amount in taxes legally possible, by asking relevant questions about your personal situation to insure that you claim all of the deductions and credits you are qualified for.