New Home Office Deduction for Tax Year 2013

On Tuesday the IRS announced a simplified method to calculate the home office deduction, which may be of interest to you independent landmen that do your own taxes.  As many of you know, the current incarnation of the home office deduction is one of the most audited items for those who are self employed.  It has a lot of rules, measurements, and a little bit of voodoo involved in the calculation.  For those of you that have learned the “voodoo method”, it will still be available to use.  The new method will be a another option available.

Simply, starting in tax year 2013, the IRS will allow you to claim $5/square foot of office space, up to a maximum of 300 square feet.  This means the maximum deduction if you use the new method will be $1500 per year.  The rules that it has to be dedicated office space that is regularly used as an office still apply, and you can’t claim more in the deduction than your business made.

In many cases you may get a higher deduction by using the old method, but at least this will give those who don’t want to fill out the Form 8829 (which is 43 lines!) a different option.

Most of this doesn’t apply if you have an S-Corp and file a corporate tax return.  For those of you that don’t use an S-Corp, I found this book for you to look at: How To Start And Run Your Own Corporation: S-Corporations For Small Business Owners.

For those of you that want to read the official release from the IRS: IRS Announces Simplified Option for Claiming Home Office Deduction Starting This Year; Eligible Home-Based Businesses May Deduct up to $1,500; Saves Taxpayers 1.6 Million Hours A Year  –  Even their article titles are complicated!

Additionally, you can also read the actual tax code for the new rules here: 26 CFR 601.105

Randy Young

Randy Young

Randy is a land consultant with experience in field and in-house land work, land administration, and software consulting with systems used in the land management business. He is an active member of the AAPL, HAPL, and NHAPL and is a regular attendee of industry functions. Randy's latest projects have included land data systems integrations, with a focus on Quorum Land System.