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Why It's So Hard To Write Off Your Home Office (Bloomberg Businessweek)



For the past decade, advocates for the home-based workforce have sought to give taxpayers the option to check a box for a standard $1,500 home office write-off. That would save them the tricky business of calculating what percentage of the home is dedicated to business—and therefore what share of rent, insurance, utilities, and maintenance costs can be deducted. Various versions of the proposal have languished in Congress for at least eight years, says Kristie Arslan, president of the National Association for the Self-Employed.

Unlike employees’ wages, business income and deductions can’t be easily verified by the IRS. In one analysis, 57 percent of sole proprietors misreported income, compared to one percent of employees. So the IRS doesn’t have much of an interest in making it easier to take the home office deduction, for fear that it could be easily abused to short-change Uncle Sam.

That leaves a headache for those trying, legitimately, to write off the cost of a workspace that happens to be in the same place that they sleep. Arslan’s question: “Why is it that if the same business person was to simply rent an office, it would be so much easier for them to take their deductions?”

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