Washington Considers A Standard Home Office Deduction

Posted in: Federal Government, National Economy
By US Business Finance Corp.
Aug 14, 2008 - 3:04:44 PM

Home office deductions
Washington helps small businesses take home office deductions
The Home Office Deduction Simplification Act (H.R. 6214) recently introduced in Congress will allow small businesses working out of a home office to deduct their office expenses by offering a $1,500 standard deduction. The $1,500 would also be indexed to the price of inflation so it would incrementally increase every year.

New York Congressman John McHugh introduced the bill noting that only about 15% of Americans using their homes to run their small businesses deduct any expenses on their tax returns. If the bill passes, an estimated 8.4 million Americans can utilize the standard deduction on their IRS returns.

Apparently, from industry feedback, the IRS' criteria for qualifying for deductions is so complex, most business owners forgo the write-offs in order to keep time spent filing down and reduce the chances of an IRS audit. Small business associations such as the National Association of Self Employed (NASE) are advocating for this legislation as a needed simplification of the federal tax code. According to the NASE's polling sixty percent of small business owners who have never used the deduction would use the $1,500 standard deduction.

The home offices deduction simplification does not stop small businesses from itemizing their expenses. It just offers a simple way for businesses, especially those who have not taken advantage of their home office expenses, to take that deduction. This would also reduce time and paperwork for companies that have been itemizing their deductions that have amounted to $1,500 or less. Drop a line to your legislator in Washington and promote this benefit to small businesses.