The Daily Item, Sunbury, PA

Business

February 1, 2013

Imagine this -- a deduction simplified

WASHINGTON, D.C. — If you're working on your 2012 tax return, you probably aren't in the mood to consider changes that await you next year.

     Nonetheless, the Internal Revenue Service wants to hear from you now about something it's going to implement this year that could affect the return you file in 2014.

     The agency recently announced a streamlined option for claiming a home office deduction. You have a chance to comment on this new option and your suggestions could help improve the change for tax year 2014 and later, the IRS says. The deadline for comment is, yes, April 15.

     The IRS says that almost 3.4 million taxpayers claimed deductions for business use of a home in 2010, the most recent year for which data are available. But many people eligible for the deduction might not be doing so because it's too complicated to work out, according to the National Association for the Self-Employed.

     A study by the association found that 42 percent of the organization's members who qualify for the deduction don't take it.

     "They don't take the deduction because they fear if they take it and make a mistake, it will trigger an IRS audit," said Kristie Arslan, president and chief executive of the association.

     Currently, if you qualify for the home office deduction, you have to fill out a 43-line form that requires calculations of allocated expenses, depreciation and carryovers of unused deductions. Makes my head hurt just to think of it.

     Sixty percent of the association members said if there were an option to take a standard home office deduction rather than itemizing, they would take it.

     Under the new option, taxpayers can fill out a simpler form, but the deduction is capped at $1,500 per year based on $5 a square foot for up to 300 square feet.

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