Home offices have been increasingly growing and employees who work at home represent a growing segment of the work force. If your home office is used exclusively and regularly for business purposes you should be aware that the IRS has created a “simplified option” for calculating the deduction for the business use of your home.
Highlights of the simplified option:
- Standard deduction of $5 per square foot of home used for business (maximum 300 square feet or $1,500).
- Allowable home-related itemized deductions claimed in full on Schedule A. (For example: Mortgage interest, real estate taxes).
- No home depreciation deduction or later recapture of depreciation for the years the simplified option is used.
Keep in mind there are good and bad aspects to this “simplified” method. The new method gives you back your full interest and tax deduction on schedule A, but you will lose your depreciation and loss carryover deductions.
While this may be a welcome relief for some taxpayers, is it the right choice for you? Please email us at: [email protected] or call us at 302-239-3500 so we can answer all your financial questions.