IRS offers new method for home office deductions

The IRS recently announced a safe-harbor metod that will make it easier for taxpayers who choose the safe harbor to take the deduction.  However, the basic qualification rules have not changed, so an understanding of them is still important.

In January, the IRS released Rev. Proc. 2013-13, which gives taxpayers an optional safe-harbor method to calculate the amount of the deduction for expenses for business use of a residence beginning with the current tax year, 2013.

Individual taxpayers who elect this method can deduct an amount determined by multiplying the allowable square footage by $5.  The allowable square footage is the portion of the house used in a qualified business use, but not to exceed 300 square feet.  The maximum a taxpayer can deduct annually under the safe harbor is $1,500.

To use the safe-harbor method, taxpayers must continue to satisfy all the other requirements for a home office deduction, including the requirement that the space in the residence used as n office be used exclusively for that purpose and the limitation that an employee qualifies for the home office deduction only if the office is for the convenience of the taxpayer's employer.

For additional information on electing the safe-harbor business use of home deduction, please contact us at 616.453.6000 or

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CPA Company LLC, 4335 Lake Michigan DR NW, Grand Rapids, MI 49534  616.453.6000