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  • Home office tax deductions for small business owners

    Chicago Tribune - 03/21/2015

    If you opt to take the simplified deduction, the IRS gives you a deduction of $5 per square foot of your home that is used for business, up to a maximum of 300 square feet, or $1,500. If your home office is over 300 square feet, you are not eligible to take the simplified method.

    In this case, using the simplified method could make more sense since you’d only get $50 more in deductions by using actual expenses. If you go the actual expense route, you also need to figure in all the time it will take you to gather receipts and records.

    “The simplified method works well for single-room offices and small operations,” says Tim Gagnon, a public accountant and finance professor at Northeastern University. “But if the business spreads throughout the house, or is a large part of the house, the ‘actual expenses’ method will probably obtain more deduction … it could be worth the effort of gathering, analyzing and separating business use from personal.”

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