Get a $1,500 tax deduction and save at least $600 in taxes with no work!

By Jeffrey Brooks, CPA, CFP, MBA for JBrooks Wealth Advisors, PC, a Professional CPA and CFP Firm  602-292-2009  Please consult with your professional tax CPA regarding your specific circumstances!

Home office election of the safe harbor method needs to be analyzed to see if it’s the best option.  As a Phoenix CPA tax and accounting firm,  we pride ourselves as always lowering our Phoenix and nationwide tax clients taxes!

We know you are busy so our Phoenix CPA firm,  looks for ways to reduce your tax burden with the least amount of work on your part.  As a tax CPA firm, we have developed turnkey systems that are required to lower taxes and IRS audit risk.

Revenue procedure 2013–13 may be good news for taxpayers who use their home for business but do not want to do the paperwork to maximize their deduction of the home-office.  Or maybe the home office is only 5 to 10% of the entire square footage of their home so the actual method will not generate much deduction.

In a nutshell, the new Safe harbor procedure allows sole proprietorships, and employees  ( including business owners  whose employer required employee to use  their home-office ) to deduct a flat maximum amount per year of up to $1500

This article is not going to delve into all the potential problems and variations that this new safe harbor rule entails.  For example if a taxpayer owns 4 sole proprietorship or is an employee and has sole proprietorships this article will not discuss allocating the $1500 between the 4 proprietorships and employer expenses.

The Purpose of this article is to solely focus on the sole proprietorship who uses his home for conducting his business and does not want to go to all the work to calculate  using the actual method.  Or the taxpayer’s square footage of the house is so large that the home office portion will not generate enough deductions to make it worthwhile to all the paperwork and calculations.

What is the sole proprietorship uses only 200 ft. for the conduct of his or her business?   When the safe harbor method is elected only $1000 is allowed for the year.  If the office was only use for six months of the year then only $500 would be allowed.

My Phoenix CPA firm,  Jeff has developed a actual home office deduction method that works extremely well for corporations and partnerships. Our tax and accounting CPA firm has helped save tax CPA clients thousand of tax dollars!

This article will not delve into the step-by-step process  that allows bigger tax deductions for the home office reimbursement to partners and shareholders.

How simple is the new IRS optional home office deduction method?  How many square feet of your home is used for business?  350 ft.?  You can only use a maximum of 300 ft.

So Starting on  January 1, 2013, you may use the IRS’s new optional home-office deduction method rather than calculate, allocate, and prove your home-office expenses

The new IRS optional method is easy. There are two steps:

1. Identify the square footage of your home office (limited to a maximum of 300 square feet).  400 square ft.

2.Multiply the square footage times $5 a foot.

3. Total is $2,000.  However limited $1,500.  However,  if you have $1,500 of schedule C sole proprietorship net income and are in the 40% tax bracket, you save $600 without having to do all the work required by the actual method.

The advantage of using the simple method versus the actual method is with the simple method mortgage and real estate tax deductions do not need to be reduced on Schedule A.

Depending on your income and how you claim the home-office deduction, the tax rate that will apply to your mortgage interest and property tax deductions will be one of the following three:

What if you are not an owner of a sole proprietorship Schedule C but an employee who does not have written request to use your home for the convenience of their employer?   Answer?  No deduction.

Zero might be the answer if you are subject to the AMT as an employee business.  Your best bet is if your employer whether a corporation or partnership reimburses you in the same year as you incur the expense.   We can help your employer reduce taxes because we are CPA firm that specializes in businesses.

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About Jeffrey Brooks

Jeffrey Brooks, CPA, CFP, MBA since 1976 has specialized in helping clients save significant taxes, help businesses increase their cash flow, revenues and profits while increasing their control and satisfaction. Jeff and his accounting firm sincerely cares about the happiness of his clients.

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JBrooks Wealth Advisors, PC.

Certified Public Accountant
Address: 4647 N 32nd Street, Suite B245
Phoenix, Arizona 85018
Phone: 602-292-2009