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The Simplified Home Office Deduction

TaxAlerts Tax Article

February 2013 | Written by: Susan Weber, CPA, EA

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On January 15, 2013, the IRS announced a new, simplified method of calculating the home office deduction starting for 2013. The new method is optional for businesses and employees who are eligible to deduct the offices in their homes that are used regularly and exclusively for their business or job.

Before 2013, taxpayers who wanted to deduct the cost of a home office had to complete Form 8829, a complex, 43-line form. Now taxpayers have the option to complete a much simpler form to claim the deduction. Please keep in mind that you still need to meet all the qualifications to claim this deduction using either method.

The maximum home office deduction using the simplified method is $1,500. Taxpayers who choose this method will not be able to depreciate the portion of their home used in a trade or business. They will be able to claim allowable mortgage interest, real estate taxes and casualty losses on the home as itemized deductions on Schedule A, but these deductions will not have to be allocated between personal and business use as they do with the regular method using the Form 8829.

"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."

If you are a taxpayer with a qualified office in your home, you should review both the regular method and the new, simplified method to determine which method will work best for you.