What Is The Simplified Method For Home Office Deduction

The simplified home office deduction can be claimed starting in tax year 2013. Under the simplified method youll receive a deduction of 5 per square feet of home office space with a maximum of 300 square feet.

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Simplified method - you get 5 per square foot of your home office up to 1500.

What is the simplified method for home office deduction. As this article is published the rate is 5 per square foot for up to 300 square feet of home office space. If you work from home you get a big break on your taxes. If you meet the criteria above youll have two choices for calculating the deduction.

Many business owners prefer the simplified method because it doesnt require calculating the cost of rental or mortgage payments. However the deduction is capped at 1500 per year. If you use a portion of your home exclusively for business purposes on a regular basis you may qualify for the deduction.

10 rows Simplified Option. The qualifications for the simplified home office deduction are the same as the regular home office deduction. How to calculate the home office deduction simplified method To calculate the deduction with the simplified method you will multiply your clients total home office space by the rate per square foot for the current tax year.

You can pick one or the other but not both. Instead you use the worksheet in the Schedule C instructions. The deduction is capped at 1500 per year so the maximum space you can claim is 300 square feet.

This applies to both homeowners and renters as. The simplified method takes the square footage of your home office with a maximum of 300 square feet and multiplies it by a rate prescribed by the IRS. For anyone who wants to claim the simplified home office deduction the IRS allows you to claim a deduction thats based on the square footage of your office.

So it can only be used for offices up to 300 square feet. Using the optional method you simply deduct 5 for every square foot of your home office. What is the simplified method for determining the home office deduction.

The simplified method The value of the home office deduction with the simplified method is the square footage of your home office multiplied by 5. Therefore for our 120-square-foot office in the above example the simplified method would allow a deduction of 120 x 5 600 which is significantly less than the calculated method allowed. If you want to use the simplified method your deduction is 5 x 150 sq.

Deduction for home office use of a portion of a. The rate for 2019 is 5 per square foot. The simplified method and the actual expense method.

Fortunately theres a simplified method thats been available since 2013. For example if you have an office space of 150 square feet and your home is 1200 square feet you are under the maximum of 300 square feet for the simplified deduction so you have the option of taking either the simplified or the regular deduction. The simplified method as announced in Revenue Procedure 2013-13 PDF is an easier way than the method provided in the Internal Revenue Code the standard method to determine the amount of expenses you can deduct for a qualified business use of a home.

If you use the simplified home office deduction method theres no need for Form 8829. The simplified method lives up to its namesake by offering an easier and simpler way to calculate the home office tax deduction. However the maximum deduction is 1500 because you can only deduct up to 300 square feet.

The IRS offers two ways to claim this write off -- the simplified method and the regular expenses method. The simplified method allows a 5-per-square-foot deduction up to a maximum of 300 square feet. You can deduct 5 for each square foot of home office space up to a maximum total of 1500.

Its worth 5 for every square foot that makes up your office space.

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