IRS Simplifies Home-Office
Deduction
The IRS is reducing the
recordkeeping required for the home-office deduction, effective for 2013.
Taxpayers who qualify may use a new optional deduction calculated at $5 a
square foot for up to 300 square feet of an area in a home that is used
regularly and exclusively for business. The deduction is capped at $1,500 a
year.
Taxpayers opting for
the simplified deduction cannot depreciate a portion of the home as they can
under the other method. However, business expenses not related to the home,
such as advertising, supplies, and employee wages are still fully deductible.
This simplified option is available starting with the 2013 tax return which
will be filed in 2014.
Extended provisions in
the American Taxpayer Relief Act of 2012
The Act extended
familiar itemized deductions, including state and local sales tax and the
premiums you pay for mortgage insurance on your home.
Above-the-line
deductions, such as the qualified tuition deduction for higher education expenses
and the $250 deduction for unreimbursed expenses if you’re a teacher, are also
available for both 2012 and 2013.
Another tax break that
was renewed: the ability to contribute up to $100,000 from your traditional IRA
to a qualified charity. As before, when you’re age 70½ or older, you can make a
distribution directly from your IRA to the charity. The amount you donate is
not included in gross income, and you can consider it part of your required
minimum distribution for the year.
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