New Simplified Option for Claiming Home Office Deduction

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Woman sitting on floor with laptop on coffee table


On January 15, 2013, the Internal Revenue Service announced a new simplified option for owners of home-based businesses and some home-based workers may also be able to use this option for calculating deductions for the business use of their homes. In 2010, over 3.3 million taxpayers claimed the deduction for business use of a home. This is good news for small businesses that often start out of the home.

Previously, claiming a home office deduction required filling a 43 line form (Form 8829) that often required complex calculations of expenses, depreciation and carryovers of unused deductions. The new optional deduction provides a significantly simplified form.

This new simplified option is based off claiming $5 a square foot for up to 300 square feet of office space in a home with a cap of $1,500 per year. This may reduce paperwork and a record keeping burden for small businesses.

This new option is available for the 2013 tax year, for which most taxpayers will file their returns in early 2014.

More information on the new simplified option for the home office deduction is available on the IRS’s website: