The IRS today announced a simplified option that
many owners of home-based businesses and some home-based workers may
use to figure their deductions for the business use of their homes. In tax year 2010, the most recent year for which figures are
available, nearly 3.4 million taxpayers claimed deductions for business
use of a 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 small businesses by an estimated 1.6 million
hours annually. ...
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
Though homeowners using the new option cannot depreciate the portion
of their home used in a trade or business, they can claim allowable
mortgage interest, real estate taxes and casualty losses on the home as
itemized deductions on Schedule A. These deductions need not be
allocated between personal and business use, as is required under the
The new simplified option is available starting with the 2013 return most taxpayers file early in 2014. Further details on the new option can be found in Rev. Proc. 2013-13, 2013-6 I.R.B. ___ (Feb. 4, 2013).