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Build Your Career Home Office

New Legislation Aims to Simplify Home Office Deductions


New legislation has been introduced in Congress to make life less taxing for small business owners who have home offices. The Home Office Deduction Simplification Act, H.R. 1827, would create a new option that allows home-based businesses to take a standard $1,500 deduction for home office expenses rather than itemize them.

More than half of small businesses are based out of a home, according to a study by the National Association for the Self-Employed (NASE).

The problem for most people is that they run into "see instructions" 17 times when filling out the home deduction form, NASE told BusinessNewsDaily. The new legislation would simplify the process by eliminating the need for home based businesses to itemize their deductions.

The new legislation was introduced by U.S. Reps. Kurt Schrader (D-Ore.) and Ron Kind (D-Wis.) and was referred to the Committee on Ways and Means for consideration. Schrader and Kind introduced similar legislation in 2009 with Republican co-sponsors. However, that legislation remained in committee when Congress adjourned.

"I’ve built two small businesses from scratch," said Schrader. "And I can tell you from experience that the complexity of our tax code hinders business growth. By making it easier for Oregon small businesses to pay their taxes you can encourage them to expand their operations and hire more workers — and job creation is exactly where Congress should be focusing our time right now."

"Small businesses are the backbone of our economy," said Kind.  "They are generating two out of every three jobs right now, serve as important anchors in our communities, and are vital to our economic recovery.  It is critical that we help these economic engines by providing the resources and tax credits to make it easier and fruitful to own and maintain a small business during this tough time.  I will continue working to provide the resources our small businesses need to grow, hire, and drive dollars back into our local communities."

"Too many home-based business owners who are eligible for the home office deduction elect not to take it because of the complexity of the form and calculations required," said Kristie Arslan, executive director of NASE. "This means valuable tax refund dollars that could be invested back into the business are left on the table each year. The creation of an optional standard deduction will go a long way in easing the minds of these cautious business owners. The fact that this bill ensures that the standard deduction will be adjusted for inflation also ensures that future businesses will be able to take advantage of this tax benefit for years to come.”

Reach BusinessNewsDaily senior writer Ned Smith at nsmith@techmedianetwork.com. Follow him on Twitter @nedbsmith.

Ned Smith

Ned was senior writer at Sweeney Vesty, an international consulting firm, and was Vice President of communications for iQuest Analytics. Before that, he has been a web editor and managed the Internet and intranet sites for Citizens Communications. He began his journalism career as a police reporter with the Roanoke (Va.) Times, and was managing editor of American Way magazine and senior editor of Us. He was a Captain in the U.S. Air Force and has a masters in journalism from the University of Arizona.