Major Change in Home Office Deduction?

[SanFrancisco]

Hi all,

I read Tom's wonderful book and somehow was under the impression that home office deductions were pretty simple: take the T/S percentage and multiply if by the total rent you have paid that year (assuming you don't share it with any other business).

To me surprise (and sadness), TurboTax is telling me that this is cap to something like $1,500 per year. We are paying about $35k for rent and our T/S is 15% hence I was hoping to deduct something like $5,250.

Has this changed recently?

Pretty sad here, thanks!

[TomCopeland]

Simplified method

Hi all,

I read Tom's wonderful book and somehow was under the impression that home office deductions were pretty simple: take the T/S percentage and multiply if by the total rent you have paid that year (assuming you don't share it with any other business).

To me surprise (and sadness), TurboTax is telling me that this is cap to something like $1,500 per year. We are paying about $35k for rent and our T/S is 15% hence I was hoping to deduct something like $5,250.

Has this changed recently?

Pretty sad here, thanks!

There is a new Simplified Method to claim house expenses. But it's voluntary, so don't use it. TurboTax incorrectly calculates how much you can get for house expenses by not applying a special rule for family child care providers that lowers the maximum you can deduct using this new rule.

So, continue to claim your house expenses on Form 8829. See my article that explains this: http://www.tomcopelandblog.com/2015/...4-part-ii.html

In TurboTax, choose the option that says, "enter my actual expenses with the Home Office Expense Report"

[SanFrancisco]

Thanks, that is really helping. I will play around with the numbers, this is going to make a major difference in our taxation (especially because we live in a very expensive area):

• With turbo tax: home deduction is $1,500, impact on taxation is roughly $750
• With the actual numbers, home deduction is $5,250, impact on taxation is roughly $2,625

[TomCopeland]

home deduction

Thanks, that is really helping. I will play around with the numbers, this is going to make a major difference in our taxation (especially because we live in a very expensive area):

• With turbo tax: home deduction is $1,500, impact on taxation is roughly $750
• With the actual numbers, home deduction is $5,250, impact on taxation is roughly $2,625

TurboTax makes an error in giving you (and every other family child care provider) $1,500 for using the Simplified Method. According to the instructions to Schedule C, line 30, family child care providers must multiply $5 by their Time percent first, and then multiply the result by 300 square feet. This drastically reduces the amount you can get using the Simplified Method. It's outrageous that TurboTax makes this mistake (which they also made in 2013).

[SanFrancisco]

TurboTax makes an error in giving you (and every other family child care provider) $1,500 for using the Simplified Method. According to the instructions to Schedule C, line 30, family child care providers must multiply $5 by their Time percent first, and then multiply the result by 300 square feet. This drastically reduces the amount you can get using the Simplified Method. It's outrageous that TurboTax makes this mistake (which they also made in 2013).

Great, there may even be some left on my 2013 declaration then!