Legislation would offer boost to small businesses that utilize a home office
Washington, DC – June 11, 2010 – (RealEstateRama) — Congressman Mark Schauer (D-MI) announced his support of the Home Office Deduction Simplification Act, a bill to streamline taxes for small business owners who utilize a home office. This legislation would help Michigan’s 648,426 self-employed business owners save an additional $1,500 on their taxes next year and significantly minimize the paperwork and time spent on tax preparation. It would also require that the amount of the standard deduction be indexed for inflation.
“My family owns a small business, so I understand how hard this economic crisis is hitting small businesses across the state,” said Schauer. “Simplifying the home office deduction will allow entrepreneurs in Michigan to focus on expanding their business and creating jobs. This bipartisan legislation is an important step forward that will help turn our economy around.”
With over half of small businesses being operated from an office inside the home, the bill will ease tax time worries for millions of entrepreneurs. The legislation would allow business owners the option of a $1,500 standard deduction, but would not preclude taxpayers currently qualifying for the home office deduction from continuing to itemize their expenses should they choose. It would simply offer a taxpayer-friendly way to take the deduction.
“The Home Office Deduction Simplification Act recognizes that a standard deduction is a much simpler and fairer way to allow business owners to use this deduction,” said Brad Close, National Federation of Independent Business (NFIB) vice president, federal public policy. “NFIB strongly supports this bill and thanks Rep. Schauer for his support on this important change to the tax code.”
According to Kristie Arslan, executive director of the National Association for the Self-Employed (NASE), three in five home-based business owners admitted they did not utilize the current home office deduction due to its complexity. Of those, nearly two-thirds said the option of a standard deduction would encourage them to take it.
“The home office deduction is the perfect example of a commonsense deduction that has become so complicated that qualifying taxpayers avoid it,” said Arslan. “An optional standard deduction would remove the barriers faced by eligible home-based entrepreneurs and allow them to take a tax benefit they greatly need in this difficult economic time.”