IRS to make it easier to file home office deduction

If you’re one of the millions of Americans who work or run a business from your place of residence, here’s some good news on taxes: The Internal Revenue Service wants to make it easier for you to file for deductions on the business-related use of your home or apartment. As the Los Angeles Times reports, to replace the complicated 43-line form you currently have to fill out to claim a write-off—the instructions alone take up four pages of text and involve computations such as depreciation and utility bill expense allocations—the IRS has come up with a much simpler option. What it calls a “safe harbor” is a method that allows you to measure the square footage of your business space and apply for a deduction. The decision comes at a time when the use of homes for work is soaring. The Census Bureau estimates that as of 2010, the last year for which data is available, 13.4 million Americans were making some type of business use of their homes—and that home businesses employed nearly 10% of all workers. But during the same year, the IRS says, just 3.4 million taxpayers filed for the home office deduction. The new IRS option, which will be available for the 2013 tax year and beyond, allows owners and employees who work from home to deduct $5 per square foot of home office space a year, up to a maximum allowable space of 300 square feet. The write-off is capped at $1,500 per year, but the hassle factor is negligible. Complete details are available in the full story here.