theVoice rockfordchamber.com April 2014
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2013 home office deduction Six facts to determine if you qualify Those who work from home should learn the rules for claiming the home office deduction. Starting this year, the Internal Revenue Service has a simpler option for figuring the deduction for business use of your home, which also makes it easier to keep records. It does not change the rules for who may claim the deduction. Here are six facts about the home office deduction.
can deduct. You claim your deduction on Schedule C, Profit or Loss From Business, if you use either the simplified or actual expense method. See the Schedule C instructions for how to report your deduction. ■■ If you are an employee, you must meet additional rules to claim the deduction. For example, in addition to the above tests, your business use must also be for your employer’s convenience. For
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■■ Generally, in order to claim a deduction for a home office, you must use a part of your home exclusively and regularly for business purposes. Also, the part of your home used for business must be your principal place of business, or a place where you meet clients or customers in the normal course of business, or a separate structure not attached to your home. Examples might include a studio, garage or barn.
Publication 587, Business Use of Your
■■ If you use the actual expense method, the home office deduction includes certain costs that you paid for your home. For example, if you rent your home, part of the rent you paid could qualify. If you own your home, part of the mortgage interest, taxes and utilities you paid could qualify. The amount you can deduct usually depends on the percentage of your home used for business.
credit if it has fewer than 25 employees
■■ Beginning with 2013 tax returns, you may be able to use the simplified option to claim the home office deduction instead of claiming actual expenses. Under this method, you multiply the allowable square footage of your office by a prescribed rate of $5. The maximum footage allowed is 300 square feet. The deduction limit using this method is $1,500 per year. ■■ If your gross income from the business use of your home is less than your expenses, the deduction for some expenses may be limited. ■■ If you are self-employed and choose the actual expense method, use Form 8829, Expenses for Business Use of Your Home, to figure the amount you
Home at IRS.gov or by calling 800-TAXFORM (800-829-3676).
Small Business Health Care Tax Credit The Small Business Health Care Tax Credit helps small businesses and tax-exempt organizations pay for health care coverage offered to employees. A small employer is eligible for the who work full-time, or a combination of full-time and part-time. For example, two half-time employees equal one employee for purposes of the credit. For 2013, the average annual wages of employees must be less than $50,000, and the employer must pay a uniform percentage for all employees that is equal to at least 50 percent of the premium cost of the insurance coverage. The maximum credit is 35 percent of premiums paid for small business employers and 25 percent of premiums paid for small tax-exempt employers such as charities. If you are a small business employer who did not owe tax during the year, you can carry the credit back or forward to other tax years. For small tax-exempt employers, the credit is refundable, so even if you have no taxable income, you may be eligible to receive the credit as a refund so long as it does not exceed your income tax withholding and Medicare tax liability. Source: Internal Revenue Service