Great news from the Internal Revenue Service (IRS) for the 52% of business opportunity, distributorship, licensee opportunity, small franchise or other business owners who work from home! Starting this year and for your 2014 tax filing, claiming the home office deduction will be easier than ever before…
As many of you know all too well, the home office deduction and whether or not to take is a source of great concern for far too many owners of business opportunities and other small businesses who run their operations solely from their place of residence. In fact, the National Association for the Self-Employed estimates that as many as 60% or more of individuals who have a home office and are eligible for a deduction of some kind as a result don’t take it.
So what gives? Well, research shows there are a couple of reasons. First, it’s all way too complicated. Filing for the current home office deduction requires filling out a separate form of more than 40 questions that includes calculations on everything from expenses and depreciation to carryovers of unused deductions—all of which requires a tremendous amount of record keeping. Secondly, that kind of complexity intimidates many home-based business owners, many of whom fear even the slightest misstep in filing could trigger an IRS audit. And few people want to invite that kind of hassle, so they decide it’s just not worth it.
With the new short-form write-off for tax year 2013 to be filed in 2014, it’s so straightforward that the chances of messing up and therefore inviting unnecessary scrutiny are all but eliminated. While you’re still only qualified to take a deduction if your home office is used exclusively and on a regular basis for any trade or business, or as a place to meet with your clients or customers, the calculating just got a whole lot easier. Now it’s really just a matter of multiplying the square footage of your home that meets the criteria for home office use by $5 per square foot, up to a total of $1,500, and you’re done. Of course, if the total is more than $1,500, you can still opt for the more complex approach in order to maximize your write-off.