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New tax law for people working at home

Posted: Feb 21, 2014

When itemizing I always took the bills including internet, water, gas and others, added those up and then you took a percentage. That has changed for this year. Just heard on TV you take the square footage of your office (or where you would work) and multiple that x 5.00 to get the total amount you can deduct. The only problem I have now is how do I find the square footage of the office??

;

Take a tape measure and measure the space - where you work. Multiply the L x W.

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nm

Wow....who knew? - SmileyChica

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I did not know they had changed to this. I also used what you did...percentage of bills, etc. This seems way easier. Do you use an accountant? Havent even looked at my taxes yet as I usually have to pay in...thx!

New way is WAY less - Keeping Track

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In 2011 I deducted $1388 for house expenses.

Using $5/sq.ft. it would have been only $565.

Not even close!!

Actually, this is much easier - sm

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Here is the IRS site that explains:

http://www.irs.gov/Businesses/Small-Businesses-%26-Self-Employed/Home-Office-Deduction

You only have to do the one calculation with the $5.00 x the square foot amount versus keeping track of all the individual expenses/receipts for expenses and taking the percentage (which I used to base on the square footage anyway). Off the top of my head, I think this simple deduction comes out to about the same as what my itemized deduction were. I believe you have the option to do either.

I always have done that and just estimate - newbutold

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I always have done that and claim a minimal amount of square footage as I have mine set up in the living room and that is it and just claim the little corner that I use of the entire room but if you are in a separate room it would be the dimensions of that room if it is used as an office and not a bedroom or living room etc.

OP here, I use a totally separate room for - my work and I do use

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someone to prepare my taxes, already got mine ready to go but husband dragging his feet some about his doctor bills, etc. We are using a new person this year but just to make sure about the costs, I am going to get together all that I did before and do the math and see for myself. I just heard this morning so we will see which way works out the best.

I think it still has to be in a separate room, though. - My desk is in my bedroom, -sm

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and I've been told I can't deduct anything. Instead, I got on low-income utilities, and then use as little of them as possible. The savings probably comes out to be pretty comparable.

I am not one to fudge, but - what if

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What if you hung a curtain around your area? Did you ever see WKRP in Cincinatti (TV show)? I think Les Nessman would put tape on the floor to designate his office. I do have my doubts that the IRS is going to do a surprise inspection on you, and if your deductions were reasonable there would not be much to be afraid of.

I do not know how this affects your utilities, though. Just saying. . .

sm - SM

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It does NOT have to be a separate room Per IRS: The area used for business can be a room or other separately identifiable space. The space does not need to be marked off by a permanent partition. - See link towards top few paragraphs under exclusive. -

I was lucky enough to have someone at HR Block know their business during a divorce after which I had to rent a tiny apartment. I WAS able to claim the space that I had to use in my bedroom for my desk/chair/bookshelf/etc. I didn't have a separate room available, but I didn't have a TV sitting on it or kids playing on it or anything else, space for my desk, computer, chair, bookshelf.

I Hate seeing people who may be in need being told by supposed tax professionals that they cannot deduct their measly desk space for work. Sorry, we aren't all independently wealthy and able to afford separate space, but we are allowed to take what is allowed and try to make a living at this 'business'. Makes me furious when people all over are getting all kinds of tax breaks and I'm agonizing over a legitimate claim of space for my desk so I can make some money at this.

Anyway, please look at the link and tell your tax guy it doesn't have to be a separate room, but you can't have kids playing on it, TV on it, etc., etc., etc.

Does this apply to employees or just IC? - nm

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It applies to you if you do deductions - I do every year- OP

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Like someone else said, doubt IRS would come to each person's home to check out their space. I have a TV set up in my workroom and could not imagine not having one while working. I sure cannot hear because of the earphones but if I wanted to watch say fashions on one of the shopping channels can look up every now and then to see what is happening.

CPAs have told me you cannot be an employee of a - Depressed

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company - you must be your own business to deduct such costs.

Well - SM

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they are wrong. If you itemize and are a telecommuter using your home at your employer's convenience for work, you can deduct expenses over I think 2% AGI. Your expenses as an employee at home may not meet that 2% AGI threshold and therefore not deductible, but worth figuring out maybe. Tell your CPAs to look up the IRS rules for telecommuters working from home for convenience of employer.

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