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Warning: I just found out I was miscalculating my home office deduction for 3 years straight
I was at a tax workshop in Austin last March and the instructor mentioned the simplified square footage method for home office deductions. I had been using the regular method and writing off a percentage of rent/utilities based on my office space. But I never realized I was including my entire electric bill instead of just the home office portion. I recalculated and I overpaid by about $600 each year. Has anyone else missed this detail with the IRS forms?
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joseph_bailey2mo ago
Actually, you might want to double check that. The simplified method is a flat $5 per square foot up to 300 square feet, so it maxes out at $1,500. The regular method can get you way more than that if your home office takes up a decent chunk of your place. You might have actually been underpaying, not overpaying, depending on your rent and utilities. The real trick is figuring out which method works better for your situation each year, since you can switch back and forth. I'd rerun the numbers both ways before assuming you overpaid.
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kelly_rivera2mo ago
Wait, does that mean I've been doing my taxes wrong this whole time? @joseph_bailey, you're blowing my mind a little right now, ngl. I remember trying the simplified method last year and getting all excited about the $1,500, only to realize my home office is like 150 square feet of my tiny apartment. Turns out I'm just bad at math on top of being bad at taxes, which is honestly on brand for me. I should probably just hire someone to do this for me, but I'm too cheap and stubborn to admit defeat yet. Maybe I'll try the regular method next year and see if I can finally get that sweet, sweet tax break that I keep hearing about. Or I'll just keep winging it and hope the IRS doesn't audit me, which is basically my life plan for everything.
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shanes662mo ago
You ever have one of those moments where you realize you've been doing something the hard way for no reason? I used to swear by the regular method but after messing it up like you did I switched to simplified and never looked back.
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