By Jason Alderman
Calculating income taxes is a royal pain, even when your situation is uncomplicated enough that you can file a 1040EZ Form. And if you’re self-
Here are a few things to remember when calculating your 2014 taxes:
First, some potentially good news for taxpayers who claim a home office deduction: You now may choose between the traditional method of calculating the business use of your home (which involves numerous calculations, filling out the onerous IRS Form 8829 and maintaining back-
Under the new, so-
Contrast that with the traditional method where you must calculate actual expenses of your home office expressed as a percentage of the square footage your home office consumes. For example, if your office takes up 12 percent of your house, you can deduct 12 percent of your electricity bill.
A few additional details:
You can choose either method from year to year; however, once you’ve elected a method for a given tax year it’s irrevocable.
Under the safe-
With the new method you can still claim allowable mortgage interest, real estate taxes and insurance losses as itemized deductions on Schedule A. These deductions don’t have to be allocated between personal and business use, as under the traditional method.
You’ll need to weigh whether the recordkeeping hours you save justify the potentially smaller deduction – especially if you have a large home office or considerable deductions. Suggestion: Look at last year’s deduction and compare what it would have been using the $5 per square foot calculation, factoring in time spent doing the math.
A few other self-
In addition to the home office deduction, you generally can deduct many other business-
You can also deduct the full cost of medical, dental, vision and long-
For more details on business expenses and deductions, see IRS Publication 535 (www.irs.gov). Also visit the IRS’ Self-
Bottom line: Income taxes are often more complicated for self-
(Jason Alderman directs Visa’s financial education programs. To Follow Jason Alderman on Twitter: www.twitter.com/PracticalMoney)