New IRS Home Office Deduction Option a Big Deal for Small Business
By Becky Greenwald, Regional Advocate for IA, KS, MO, NE, Office of Advocacy
The Internal Revenue Service adopted a new simplified option for calculating the home office deduction starting in 2013. The IRS estimates this common sense change will reduce the paperwork burden on small businesses by 1.6 million hours annually for the 52 percent of our nation’s 27.8 million small businesses that are home-based. This is a big deal for Iowa’s home-based small businesses that may benefit from this new, streamlined deduction calculation option.
The new option allows a deduction of up to $1,500 based on a formula of $5 per square foot of office space used. As a result, home-based small businesses may benefit by calculating the home office deduction without the extensive administrative burdens previously required.
For many years the Office of Advocacy has worked with the IRS to encourage the simplification of the home office business deduction. Most recently, the Office of Advocacy made simplification of the home office deduction its top recommendation in a formal letter to the Tax Reform Subcommittee of the Presidential Economic Recovery Advisory Board. The Office of Advocacy applauds this change along with the resolute advocacy of the many small business organizations that have pressed for this change over the years.
The Office of Advocacy independently advances the views, concerns, and interests of small business before Congress, the White House, federal regulatory agencies, federal appellate courts as an amicus curiae on regulatory matters, and state policymakers. The office identifies issues of concern through economic research, policy analysis, and outreach to small business owners and representatives. Advocacy gives small firms a voice early in the process of rulemaking. This is possible because of Advocacy’s outreach network—as one of 10 regional advocates around the United States, I operate from Des Moines and speak for small businesses in Iowa, Kansas, Missouri, and Nebraska.
Advocacy’s website, www.sba.gov/advocacy, provides important information and access to other electronic communications. It contains vast amounts of small business data and statistics, a record of the major rulemakings Advocacy is involved in, and links to information streams like Regulatory Alerts, which are notices of rules in process. The website also contains The Small Business Advocate newsletter, plus links to the office’s Twitter feed, “Small Business Watchdog” blog, and Facebook page.
Despite its small size, Advocacy is one of the most interesting and effective offices in the federal government; this is very much a reflection of the importance of the sector it speaks for: America’s small businesses.