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Ask A CPA - Tax Law changes - 2013

Simplified Option For Claiming Home Office Deduction

This safe harbor method is an alternative to the calculation, allocation, and substantiation of actual expenses for purposes of satisfying the requirements of the Internal Revenue Code. The new optional deduction is capped at $1,500 per year and is based on $5 a square foot for up to 300 square feet. Homeowners using the new option cannot depreciate the portion of their home used in a trade or business nor deduct actual expenses related to the qualified business use of that home. Also, they may not carryover any excess deductions in any other taxable year. The current restrictions on the home office deduction, such as the requirement that a home office must be used exclusively and regularly for business and the limit tied to the income derived from the particular business, still apply under the new option.

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