Home Sweet Home

Change is difficult, but change is good. If we don’t change the way we do things sometimes, we can become stagnant and stale. This past year, I changed my office environment (added more work space and even a gym), added new employees, and even moved into a new home. Speaking of new, the IRS has a new, and believe it or not, easier way to calculate a home office deduction.

If you work from home, or have a home office, then keep reading because these changes could affect you. The new option doesn’t change the rule of who can claim the deduction; you must still use your home regularly and frequently as your principal place of business, as a place to meet or deal with clients, and, if you’re an employee, you qualify if your home is used for convenience of your employer. There are also cases where you can claim a home office deduction for storage use, rental use or daycare-facility use (but e-mail me directly for more about that). If you meet the criteria, then figuring out how much to deduct will be easier to calculate this year.Here’s what you need to know about the simplified option for home office deduction:

$5 per square foot – This number is the same and has not changed. You can still claim $5 per square foot of your home used for business.

Maximum 300 square feet  – You can now claim a maximum of 300 square feet per home office deduction. Before this number was a percentage of your home used for business.

Schedule C Entry – Instead of filling out a separate form, you can now fill out a worksheet in the Schedule C instruction book and enter the simplified deduction amount on Schedule C.

No Depreciation Deduction – In the past, you or your accountant would have had to calculate the depreciation deduction for the portion of your home used for business. This year, there is NO depreciation deduction.

Photo Credit: adamr

If you’re filing your own taxes, remember you can choose to use this new simplified method or the regular method. If you need help working out either, give me a call or e-mail me. If you have an accountant doing your taxes for you, remember to ask him or her which one is better for you.

So this year, the changes continue for the better. I am thrilled to have new faces, which I hope to introduce to you soon, and a new place to call Home Sweet Home! Here’s to great changes for everyone on the horizon!