Question

Review the advantages and disadvantages of the Simplified Method for determining the office in the home deduction. Create a brief summary of your findings, and e-mail it to your instructor.

 

 

Answer 1

Office in home expenses is not allowed for deduction either of employee or self-employed its some portion is exclusively used for business on a regular basis or is used as place of business used by customers, clients or patients for the convenience of the employer.

 

The office in home expenses deduction can be computed either by the regular method or the simplified method.

 

In the simplified method, deduction amount is $5 per square foot of space committed to the office up to $1,500 or 300 square feet.

 

The advantage of the simplified method is as mentioned below.

1. The major merit of this method is simplicity.

2. It required less record keeping and only one computation is required.

 

Disadvantages of the simplified method are as mentioned below.

1. Excess unused past losses cannot be claimed and current year excess losses cannot be carried forward.

2. Generally, deduction amount under this method is less than that computed under the regular method.

Office in home expenses is not allowed for deduction either of employee or self-employed its some portion is exclusively used for business on a regular basis or is used as place of business used by customers