Posted on January 30th, 2014

These often have been associated with a higher incidence of IRS audit because the IRS did not believe many people qualified legitimately for this deduction. And in truth, many people exaggerated the amounts.

To make things easier and cleaner, the IRS came out and said you can use a safe harbor method but only if you 1) use the place as your exclusive and regular usage of a business office, or 2) use it for storage of inventory or business supplies.

Business usage must not exceed 300 square feet and the rate of deduction is the number of square feet times $5.00 per SF and not to exceed a $1,500 per year (300 times 5).

This does make it easier to quantify and deduct. While business office deduction is not such a big deal in terms of money. Every little bit helps.