IRS Simplifies Home Office Tax Deductions
IRS Simplifies Home Office Tax Deductions
Four requirements for ministers' eligibility.

Earlier this year the IRS announced a simplified "safe harbor" that taxpayers can use to compute a tax deduction for the business use of their home. According to IRS data, about 3.5 million taxpayers claim a deduction for the business use of their home (commonly referred to as the home office deduction).

The new optional deduction, capped at $1,500 per year based on $5 a square foot for up to 300 square feet, will reduce the paperwork and recordkeeping burden on taxpayers by an estimated 1.6 million hours annually.

"This is a common-sense rule to provide taxpayers an easier way to calculate and claim the home office deduction," said Acting IRS Commissioner Steven T. Miller. "The IRS continues to look for similar ways to combat complexity and encourages people to look at this option as they consider tax planning in 2013."

The new option provides eligible taxpayers an easier path to claiming the home office deduction. Currently, they are generally required to fill out a 43-line form (Form 8829) often with complex calculations of allocated expenses, depreciation, and carryovers of unused deductions. Taxpayers claiming the optional deduction will complete a significantly simplified form.

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Posted: April 1, 2013

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