More On Tax Planningfrom The Advisor's Professional Library
- Selected Provisions of the American Taxpayer Relief Act of 2012 The experts of Tax Facts have produced this comprehensive analysis of selected provisions of the American Taxpayer Relief Act of 2012 (the Act) to provide the most up-to-date information to our subscribers. This supplement analyzes important changes to the tax code with emphasis on how these developments impact Tax Facts’ major areas of focus: Employee Benefits, Insurance, and Investments.
- IRAs: In General Individual Retirement Accounts are highly popular tools for contributing funds that grow on a tax deferred basis. Depending on the type of IRA, the accumulation can be tax free.
The lives of home office dwellers just got easier—and maybe cheaper.
The good news is that he Internal Revenue Service announced a new option on Tuesday for those who claim their home as their primary work space. The bad news is that won’t apply to 2012; rather, the allowable expense method will begin for the 2013 tax year.
The deduction method is meant to simplify a confusing process, one that often leaves taxpayers facing an audit. Instead of working through the minutia of the seemingly endless Form 8829, taxpayers will have the option of deducting $5 per square foot for up to 300 square feet of office space, or $1,500.
The word “option” should be emphasized, since home office workers will still have the choice of using Form 8829 if that deduction is larger than the newly introduced alternative method. Individuals will weigh the time expense of filing out the old form against the difference in the size of the deduction.
Currently, taxpayers who claim the home office deduction are required to fill out a separate form calculating the percentage of the home that is used solely for the business and the percentage of expenses that apply to the office. According to CNN Money, it can be very complicated to figure out. But starting next year, the individual will no longer need to do those calculations.
“This is terrific news for the 52% of all small business that work from home, who fight every day to meet their bottom lines while continuing to contribute to the economy,” Kristie Arslan, president and CEO of the National Association for the Self-Employed, an organization that lobbied for the change, said in a statement. “The previous calculation for the deduction was cumbersome and time consuming for America’s smallest business and year after year hard-earned dollars were left on the table.”
Check out IRS Says 44% Cut in Tax Rates OK With Us at AdvisorOne.