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Friday, June 26, 2009

Bill Introduced to Allow Home Office Standard Deduction

Senators Olympia J. Snowe (R-ME) and Kent Conrad (D-ND) and Rep. Charles A. Gonzalez (D-TX) have introduced the Home Office Tax Deduction Simplification and Improvement Act of 2009.  From Web CPA:

The bipartisan bill, introduced in both the House and Senate, would direct the Treasury Secretary to create an optional, easy-to-use standard deduction to encourage greater use of the home office tax incentive. In addition to instituting an optional home office tax deduction, the [bill] would require the IRS to streamline its reporting requirements to clearly identify the portion of the deduction devoted to real estate taxes, mortgage interest and depreciation in order to further reduce the burden on the taxpayer....

Recent research from the U.S. Small Business Administration indicates that roughly 53% of America’s small businesses are home-based, but few home businesses actually take advantage of the tax incentive because of the complex, rigid reporting requirements.

See also Rep. Gonzalez's press release.

http://taxprof.typepad.com/taxprof_blog/2009/06/bill-introduced-.html

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Comments

This is just what we need now, another deduction that benefits upper-middle income taxpayers, where do I go to sign up?

Posted by: mike livingston | Jun 27, 2009 7:31:44 AM

It is the upper middle income taxpayers who can afford to dedicate a spare room or similar space to their business.
Those who can't afford this are left out in the cold under current law. Consider two of my clients, one a free-lance journalist, the other a free-lance legal clerk and researcher working at multiple firms, both operating out of their rental apartments, both with gross income around $50K. Neither could take the home office deduction because neither could meet the "exclusive space" requirement. Yet both were performing most of their work at home.

Posted by: Whitey | Jun 27, 2009 10:31:07 AM

I bet many more would take the deduction if it didn't trigger an automatic audit.

Posted by: Tom | Jun 27, 2009 4:06:40 PM

This will not have an impact on me, and I work from home. Who is this supposed to benefit?

Posted by: download music | Jun 29, 2009 9:47:58 AM

"I bet many more would take the deduction if it didn't trigger an automatic audit."
I think it is more the fear of an automatic audit that stops taxpayers.I have used the form 8829 many (maybe on 10 taxpayers) times and never had it questioned.

"This is just what we need now, another deduction that benefits upper-middle income taxpayers, where do I go to sign up?"
I haven't read the bill but what is new that would help upper middle class taxpayers the regular office in home deduction has been there for years. Simplification will probably help self filers whoaren't neccesarily upper income.

Posted by: Dave M | Jul 1, 2009 5:46:00 AM