Today the Internal Revenue Service announced a new, simplified option for taxpayers claiming a home office deduction. This is effective for the 2013 tax year onwards.

Up to US $1,500 home office can be deducted by qualifying taxpayers based on $5 per square foot up to 300 square feet.

This option will save taxpayers time in calculating this deduction, which is available for home-based businesses and some home-based workers. To date, many calculations and pro-rations have been required, together with adequate record-keeping to support the deduction.  Under the new method, no pro-ration between business use and personal use is required, with home mortgage interest, real estate taxes and casualty losses related to the home fully claimable on Schedule A as itemized deductions.

Depreciation on the portion of the home used in the business may not be claimed under the new option.

Note that the new method is not available as yet for 2012 returns, and will only be claimable for 2013 returns prepared in 2014.

More detailed information is contained in a Revenue Procedure published today.