Home Office Deduction

Of the 21 million non-farm small businesses in the U.S., 53 percent of them are home based. Unfortunately, these small businesses fall under most of the same tax requirements and regulations as the large corporations. That is why taking tax deductions for having your office in your home is so complex. Many of us do not even bother with this deduction any longer. The Office of Advocacy of the Small Business Administration states that, tax compliance is 67 percent more burdensome for the smallest businesses compared to their larger competitors.

Now, Senator Olympia Snowe (R-ME) has introduced a bill in the Senate to simplify home office deductions: “Home Office Deduction Simplification and Improvement Act of 2008” (S.3371), and Representative Charles Gonzalez (D-TX) has introduced companion legislation (H.R. 7074) in the House.

The issue of onerous tax regulations on small businesses has been debated for many years. I attended my first conference on this issue over 20 years ago, and little has been done—by either political party— since then.

If you have a small home-based business, I would highly recommend that you look at S.3371 and H.R. 7074. If you think they would benefit your tax situation, drop an email to your respective Senators and Representative encouraging passage.

4 thoughts on “Home Office Deduction”

  1. I can attest to this!! And from what I’ve heard, this is one of the biggest flags for an audit currently as well! In the past, I’ve usually “under-estimated” what my actual usage is so as not to raise any issues, but for some in-home businesses, there isn’t much of the house that DOESN’T get used in one way or another. Simplification of this part of the processes will be a huge help! My letters to the the CA reps will be going out shortly. (Senator’s mailboxes are shut down currently because of the financial crisis and bailout mess.)

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