There are many advantages to being self-employed and selling your services on Zoondy’s online employment marketplace, but struggling through tax forms isn’t one of them. If you’re still sweating through your 2012 tax forms trying to figure out your home-office deduction, there is good news on the horizon. The IRS is simplifying the home-office deduction. Unfortunately, the change doesn’t kick in until the 2013 tax year so it won’t help you now; but next year will be a different story.
Beginning with the 2013 tax filings, instead of slogging through a long, 43-line form, people who work from home will be able to use what the IRS is calling the “safe harbor method” to compute the tax write-off of the portion of their home they use as a home office. The 13.4 million Americans who work from home — nearly 10% of all U.S. workers, according to the U.S. Census Bureau — should be cheering. It is suspected that many don’t take the trouble to claim the allowable home-office deduction because they can’t figure out the forms. According to the IRS, only 3.4 million Americans — about a quarter of those eligible — who said they used their home for business actually filed for a home-office deduction in 2010.
In an interview with Washington Post writer Kenneth Harney, Kristie Arsian, president of the National Association for the Self-Employed, said she thinks “cumbersome and time-consuming” IRS requirements discourage self-employed workers from claiming federal tax deductions they are entitled to. Compared to the current form, which requires extensive record keeping and mathematical computations, the 2013 home-office deduction is going to be a breeze.
Starting with the 2013 tax year, business owners and employees who work from home will be able to deduct a flat $5 for each square foot of home office space. A 300-square-foot cap and maximum $1,500 deduction shouldn’t negatively impact most home office filers. So as you struggle with the calculator this year, console yourself with the thought that next year claiming your home-office space as a tax deduction will be easy!