The Internal Revenue Service announced a simplified option that many owners of home-based businesses and some home-based workers may use to figure their 2013 deductions for the business use of their homes.
In tax year 2010 approximately 3.4 million taxpayers claimed deductions for business use of a home also known as the home office deduction.
The new optional deduction, which is capped at $ 1,500 per year based on $ 5 a square foot for up to 300 square feet, will reduce the paperwork and recordkeeping burden on small businesses by an estimated 1.6 million hours annually.
The new option provides eligible taxpayers an easier path to claiming the home office deduction. Currently, they are generally required to fill out a 43-line form, Form 8829, often with complex calculations of allocated expenses, depreciation and carryovers of unused deductions. Taxpayers claiming the optional deduction will complete a significantly simplified form.
Though homeowners using the new option cannot depreciate the portion of their home used in a trade or business, they can claim allowable mortgage interest, real estate taxes and casualty losses on the home as itemized deductions on Schedule A. These deductions need not be allocated between personal and business use, as is required under the regular method.
Business expenses unrelated to the home, such as advertising, supplies and wages paid to employees are still fully deductible.
Current restrictions on the home office deduction, such as the requirement that a home office must be used regularly and exclusively for business and the limit tied to the income derived from the particular business, still apply under the new option.
Simplified home office deduction option for 2013
Simplified Sales Tax in QuickBooks
Some small business owners in North Carolina need to collect sales tax from customers and remit payments to the NC Department of Revenue. In paper days, it would be fine to set-up tax items for multiple counties that have the same overall sales tax rate, but if you plan on filing online there is an additional schedule to complete where you have to enter the tax liability for each county. If you want to file online and save a stamp, here are some tips to make the process easier:
Create Sales Tax Items – Set-up a tax item for each type of tax that is due at the current tax rate. For example, State of NC at 4.75%, Durham at 2.25%, Transit County at .5% etc.
Create Sales Tax Groups – This is the important step. Create groups, such as Durham County, Wake County, and Orange County. In the group add in State of NC and the appropriate county, transit, and any other type of sales tax that may be due for that county. For example, the Durham County group would have the tax items called State of NC and Durham, making the total tax charged to customers in Durham County be 7%.
Generate the Sales Tax Liability Report – When you are ready to file your sales tax return online, generate the Sales Tax Liability Report. The amounts due for specific counties are already broken down so you can enter them in the separate schedule.
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