Brendan Willmann, CPA, EA, CFP®
Asheville: 828-348-8698
Cincinnati: 513-549-2736

Simplified Home Office Deduction Considerations

For 2013 the IRS has introduced a far simpler, alternative calculation method for taxpayers claiming the home office deduction.  The new method simply multiplies the eligible square footage (up to a maximum of 300 square feet) by $5 to determine the allowable deduction.

While simplification of the tax code is usually welcome news, there are several considerations that deserve particular attention:

– The simplified home office deduction is limited to $1,500 (300 square feet x $5).

– The simplified calculation does not replace the actual expense method.  Taxpayers may need to calculate the allowable deduction under both methods to determine the option that offers greater savings.

– For homeowners, the simplified method does not allow for a depreciation deduction (or require subsequent depreciation recapture).

In sum, while taxpayers should be familiar with this simplified option it is important to note that this is merely an alternative calculation method.  Taking the time to identify and calculate every allowable deduction via the actual expense method may offer a significant reduction in tax liability.



The articles presented on this blog are general in nature and should not be assumed to be applicable to your situation. In addition, tax law changes daily and the articles on this blog are not updated to reflect these changes. Anyone receiving any part of the information on this blog should not rely on or act or refrain from acting on the basis of any matter or information contained in this blog without seeking appropriate tax, legal or other professional advice. The transmission and receipt of information contained on this blog does not form or constitute a client relationship. Nothing in this blog constitutes legal advice. Opinions rendered by tax professionals are not authority.  You agree to hold Brendan Willmann, EA, forever harmless from any liability for your use or failure to use the information, advice, referrals, or suggestions provided by this blog at any time. 


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