Get Started: Home office deduction, contracting

EASIER HOME OFFICE DEDUCTION

The government is making it easier for small business owners to take advantage of the tax deduction for home offices. Starting with 2013 tax returns that will be filed in 2014, the Internal Revenue Service will give owners a streamlined option for claiming the deduction.

Under the new option, which is also available to employees who work from home, taxpayers can deduct $5 per square foot of home office space, with a limit of 300 square feet or as much as $1,500. The form they'll need to fill out will be much shorter than the 43-line form now used (Form 8829, Expenses for Business Use of Your Home).

The current method of deducting a home office requires taxpayers to determine the percentage of their home that is devoted to an office. They must then use that percentage to compute how much of their home expenses such as rent, mortgage insurance, repairs and utilities can be deducted.

The new option is akin to the standard deduction that many individual taxpayers use rather than itemizing expenses like health care costs, mortgage insurance and taxes.

The rules that govern whether owners can deduct part of a home will still apply. Under those rules, a home office must be used regularly and exclusively for business purposes.

An estimated 52 percent of small businesses are home based, according to the Treasury Department and the Small Business Administration.

SIMPLIFYING THE CONTRACTING PROCESS

The Small Business Administration is simplifying the process for small companies to find and bid on some government contracts. The SBA has launched a beta, or pilot, version of RFP-EZ, a new online marketplace for contracts worth $3,000 to $150,000.

RFP-EZ (the RFP stands for request for proposals) allows a small business to create a profile and then search for contracts that match its skills, services and products.

You can access the new marketplace at https://rfpez.sba.gov/

The SBA says the project, if successful, will be expanded to include a broader range of contracts.

Loading...
See all articles from Associated Press

Friend's Activity