Posted by John Tennant on 1/15/13 4:36pm
Msg #450574

Home office tax deduction.

Good news for those that take the home office tax deduction. In the past, as well as for tax year 2012, it has been necessary to fill out the 43 line form 8829. IRS just announced starting with the current tax year (2013) that will no longer be necessary. For the new home office deduction, $5.00 per square feet, up to 300 square feet. Maximum $1500.00 per home office. In addition, you will no longer have to make adjustments if you sell the property for depreciation (you will not claim it for the office deduction) that you may have taken. For those that have not yet set up a home office, you might want to check the IRS website for the required guidelines so that you can do so.

Reply by C. Rivera Chicago Notary Services on 1/15/13 4:47pm
Msg #450578

thanks for the info John, I'm working on ours...ugh n/m

Reply by MW/VA on 1/15/13 7:19pm
Msg #450604

Thanks, John. I know I wasn't taking that deduction because

the IRS made it a total PIA. I'll have to re-think it this year.

Reply by Deborah Breedlove on 1/15/13 9:18pm
Msg #450625

Re: Thanks, John. I know I wasn't taking that deduction because

I got that email from the IRS and was thinking about the pros and cons for my tax clients.

Pros: Clients don't have to take depreciation that they may have to recapture when they sell it. Clients don't have to keep track of utilities, home repairs, insurance, etc. It's like a standard deduction for office in home.

Cons: Mortgage interest and real estate taxes will not be included in the office in home deduction. Yes, they can deduct them as an itemized deduction, but it will not reduce Sch C income for SE tax. Clients don't get a loss on the business portion of the home sale if their value has dropped below their adjusted basis.

Each taxpayer will have to look at this individually. For those who never took this deduction before because of the hassles, this will be a nice break. For those who have always taken it, and are use to keeping track of the info, the regular method will still give a better tax break overall.

Reply by sueharke on 1/15/13 11:10pm
Msg #450639

Re: Great analysis

Great analysis of the two choices for the deduction. You laid it out nicely for anyone to understand.

Reply by Susan Fischer on 1/15/13 10:00pm
Msg #450631

That helps tons of small businesses. Great post, John. n/m