PB and J with a Side of Tax Deductions
What Tax Deductions Have to do with Your PB and J?
I’ve just returned from out of town and my refrigerator looks “empty.” It’s got a door full of condiments and a random assortment of possibly (probably) expired salad dressings that I don’t really ever use anymore but haven’t thrown out yet. Otherwise, it’s devoid of any real food.
Since I’ve just returned I’m working from home and admittedly procrastinating by deciding to get something to eat. Those of you who work from home know this routine very well. It goes something
like this. . .
You get up from your computer and walk in the kitchen. You look in the refrigerator and peruse your options. You close the fridge, grab a hand full of nuts, and get back to your desk. An hour later, you
think, “I should step out for a bite to eat” or “I should go to the grocery store.” But instead, you pop back into the kitchen and eat a banana to tide you over until you finish just one more thing. Before
you know it hours have past. Now it’s too late to go get lunch so you decide to make a PBJ since it’s the only thing you can cobble together without leaving the house.
Ahhh, the joys of working from home!
While there may be some nutritional drawbacks to working from home, it does have tax advantages. But like those ignored salad dressings in my refrigerator, many of you who work from home don’t use them because they seem like too much of a hassle.
An estimated 52 percent of small businesses are home-based, and many of us have home office space that would qualify for a home office tax deduction. As technology improves, more businesses – large and small – are going virtual and recruiting employees from across the country, many of whom work from home offices. Home offices are here to stay.
So why don’t more business owners take the home office deduction?
Small business owners complain that the home office tax deduction is hard to understand or they don’t know how to file for the deduction. But there’s good news on this front. It’s about to get easier. The
Internal Revenue Service (IRS) just announced that a new simpler option for calculating your home office tax deduction.
Small business owners and employees with a qualified home office could deduct up to $1500 per year. The new option allows qualified taxpayers to deduct annually $5 per square foot of home office space
on up to 300 square feet, for as much as $1,500 in deductions. To take the deduction you must use your home office regularly and exclusively for business, and the limit on the amount of the deduction is tied to income derived from the particular business.
The IRS estimates we taxpayers will save more than 1.6 million hours per year in tax preparation time from this simpler calculation method.
The new option for the home office deduction will be available starting with the Tax Year 2013 return, which most taxpayers file early in 2014.
Interested in the details? Click here for current Pub 587 from the IRS website (Business Use of Your Home)