The IRS has made it easier for small business owners to deduct home office expenses. Beginning with 2013 tax returns, you can elect to use the simplified method allowing a maximum $1,500 deduction. (IRS Internal Release 2013-5)
Strategy: Don’t automatically take the “easy way.” Figure out if you’ll come out ahead with the traditional approach for deducting home office expenses.
In many cases, you’ll find the traditional method will produce a significantly larger deduction.
Here’s the whole story: To qualify for home office deductions, you must use the office regularly and exclusively as your principal place of business (i.e., the place where you conduct most of your income-earning activities), or as a place where you meet or deal with customers, clients or patients in the normal course of business, or as the place where you conduct virtually all of your (register to read more)and administrative activities. Also, if you’re an employee, y...