More and more small businesses are operating from home offices these days. One of the many benefits business owners receive from home is the home office deduction. This year, however, there are a few changes in the home office deduction.
In the past, the process of filing for a home office deduction was cumbersome. Small business owners with home offices continue to have the option to file taxes in the traditional manner. And for some, it may still be the way to go because it may calculate out to a higher deduction.
However, for many small business owners, there is large appeal to the simpler home office deduction option now available to them. It provides a much more streamlined filing experience and doesn’t tax (if you’ll pardon the pun) their math skills too terribly.
What is the New Home Office Deduction?
This deduction allows you the option to claim a standard five dollar per square foot option for your home office. There is a cap of $1,500 for year for a maximum deduction size of 300 square feet.
The standard requirements still apply as far as the space being used specifically and solely for the purpose of operating your business. You are also still allowed to deduct business expenses unrelated to your home, including office equipment, office supplies, employee wages, advertising, etc.
Perhaps the biggest benefit to small business owners, however, is the simplified reporting that goes along with the new simplified deduction. How many long hours have you invested in past years gathering all the documentation needed to file your taxes and claim your home office deduction?
Most home office owners agree that the record-keeping required is time-consuming. The simplified option changes that. Rather than filling out all 43 lines of the dreaded Form 8829, along with the complicated calculations, depreciation and carryovers that form requires, taxpayers have the option of adding a single line
The IRS suggests this new, simplified option will reduce the record keeping burden of small businesses by nearly 1.6 million hours per year.
If you want to keep things the way they were, in some cases you’ll net a higher deduction with the older method of filing, you may do so. However, if you’re looking for a simpler filing option that may leave a little hair on your head the new option may be a good fit for your needs.
Operating a business from your home does require hard work and dedication. You protect that investment of your time, effort, and energy by paying your taxes so that the income and your business aren’t jeopardized.
Paying taxes alone, though, is not enough. You must also think ahead and invest in a solid business insurance plan that includes general liability coverage in order to provide well-rounded protection for your home, your home office, and your small business.