DEAR HARRY: I work as a sales rep for a company based in Chicago. We have no local office, so I work from home in a converted storage closet that's about 10 feet by 9 feet. I have my company's laptop and my desk and chair there, period. I have never claimed any of my expenses for this office on my 1040. I just did not want to get involved in a hassle with Uncle Sam, because I understand that a home-office deduction is a flag for them to audit me. The guy who prepared my 2012 return told me that he thinks that the IRS is going to have some alternative to listing those expenses for a home-expenses automobile (something like the per-mile auto allowance). Is this so? Can you fill me in?
WHAT HARRY SAYS: Yes and yes. In January, the IRS authorized an optional method of deducting home-office costs. It takes effect for this year. Your office has 90 square feet. The allowable option grants you a deduction of $450. That's 90 feet times the $5-per-foot allowance. You won't have to file a Form 8829, either. You may use this method one year and go to actual expenses the next, and then back again. Of course, you still may deduct only the optional allowance if you otherwise qualify for a home-office deduction. It must be for your employer's convenience and used solely for business purposes.