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Melanie Pinola

Taking a Home Office Tax Deduction Is Now a Whole Lot Easier

By January 21, 2013

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You're a telecommuter, sometimes work from home, or have your own home business. Come tax time, the most headache-inducing deduction is the "home office deduction." Can you/should you take it? New rules make it easier to do so than ever.

To qualify for a home office deduction, you have to be using your home office as your principal place of business or somewhere you regularly meet clients or customers. If you work as an employee, you can only deduct your home office expenses (and all costs related to that portion of your home, including utilities) if you're working from home for your employer's convenience--for example, if your employer is in another state and doesn't have offices you can commute to.

The home office deduction is a valuable one, but gathering all the backup information and receipts for indirect expenses is a bit of a pain. So recently, the IRS introduced a new home deduction method: multiply the allowable square footage of your home office by $5.00 to get the home office deduction. Easy peasy.

The fine print reads that you can't exceed 300 square feet for your home office and you can't deduct expenses for the home elsewhere--except those that are otherwise deductible themselves, such as mortgage interest and real estate taxes. Business expenses unrelated to your home office are still deductible.

Forbes offers some examples of how the new simplified home office tax deductions work. Tax issues for telecommuters and freelancers have never been exactly easy to understand, but this new method of calculating the home office deduction is a step in the right direction.


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