Blogger: Rachel Kent
Most authors have a home office space for writing–or at least a little area for a table and computer. The IRS allows for home-office deductions for small businesses, and I have learned that this year there’s a new way to do your at-home business deductions. An article in the December issue of The Costco Connection highlights this new deduction method.
(DISCLAIMER: I am not an accountant, and have no claim on being a tax authority. Please talk with your accountant about this so that you can make sure you are making the best tax decisions for you.)
Before this year, your office space deduction had to be based on the percentage of your home you used for an office, and there was a depreciation deduction for that part of the home. This depreciation will be recaptured (you have to pay it back) if you sell your home. The depreciation for each year isn’t too much, but if you write off your office for 30 years and then sell your house, that amount adds up! I learned about this depreciation recapture this year when we sold our house. We have to pay back the depreciation from my home office in our old house when we file our taxes. It’s not enough money to cause worry, but I was unaware that we were going to have to pay anything back when we sold.
The new, simplified method allows for a $5 per square foot deduction up to 300 square feet–and with this method there’s no depreciation deduction recapture to worry about. For small home offices, this might be a better method. The Costco article even mentioned that, with the simplified method, if you store business supplies in your garage you can include that square footage in your deduction. Storing copies of your books? Talk to your accountant about including that square footage, too.
If you’d like to find out more about this, check out www.irs.gov Publication 587, Business Use of Your Home.
I hope this is helpful to you as we all get to work on our 2013 taxes!
Is it hard for you to think of your writing as a small business? Why or why not?