Articles from The Mediator
Tax Stuff: Home Office Simpler
The home office deduction can be very valuable for those whose principal place of business is their home — even if it isn’t their only place of business. But calculating the deduction hasn’t always been so easy.
IRS has issued new rules simplifying how to do this. Previously, you had to track actual home expenses (rent, mortgage, utilities, etc.) and multiply them by the percentage of the square footage of the home used as a home office. This meant lots of recordkeeping, calculations — and errors — at tax time.
Now IRS allows a simplified method for calculating the deduction. Just multiply the square footage of the home office (up to 300 square feet) by $5, and you have the deduction!
You can use either the old or simplified method, whichever yields the higher deduction, and you can switch methods each year. There are some fine distinctions between the two methods, so it’s best to consult with a tax advisor to be sure you qualify for the deduction, as well as which method is most beneficial.