Do you work at home or have a home-based business? The IRS has created a simpler option for calculating the deduction for the business use of your home. The new option makes recordkeeping easier because you can use a standard rate per square foot. The rate is $5 per square foot (up to a maximum of 300 sq. feet or $1,500) for qualifying business use space in place of taking a pro rata percentage of items (such as mortgage interest, taxes and repairs).

Keep in mind there are good and bad aspects to this “simpler” method. The new method gives you back your full interest and tax deduction on Schedule A, but you will lose your depreciation and loss carryover deductions. Of course, you must still use your home office regularly and exclusively for business.

Please contact us for answers to all your financial questions.