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How to Claim you home office Tax deduction.

Self employed people and Employees working from home can claim home office tax break using the new Streamlined formula or Itemize home office Deduction.

Many self employed people of people who have a second income generating work in addition to their main job are allowed to claim a tax credit if they use a home office for that work.

However, many people don't claim this tax break because they sometimes don't know about it or they fear they will get audited.

The IRS (Internal Revenue Service) has developed new guidelines where can use a simple Streamlined formula to find how much they can claim for their home office based on the size of their home office.

The new Streamlined formula lets taxpayers deduct $5.00 per square foot of their home office. You are allowed to deduct a maximum of $1500.00 for your home office per year.

People who use this option will not be required to fill the form listing expenses like percentage of electric costs and utilities used in their home office and what is the proportion of their home office space in relation to the total square footage of their whole house.

It is however advisable to calculate both the maximum deduction you get from new formula of $5.00 per square foot or by Itemizing your tax filing and see which will give you a higher return. Then you can choose whichever gives you a bigger tax break for your home office.

The eligibility requirements to claim a tax deduction for your home office remain the same. This rule states that the office must be used regularly and exclusively for business purposes.

Employees can claim for deduction on their home office only if their employer requires them to work from home.

So if you are eligible for a home office tax break, you should take advantage of it because it is completely legal and will not result in an audit.


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