the Internal Revenue Service, only 2.7 million of the nearly 20
million Schedule C filers in tax year 2003 took a deduction for
home office expenses, despite the fact that some 8.4 million
Americans indicated they had one or more rooms used only for
Congressman John M. McHugh (R- N.Y.)
"The tax code currently allows a deduction for home office
expenses for self-employed taxpayers and employees who must use
their home for business purposes at their employer's request,"
said Rep. McHugh. "However, according to the Internal Revenue
Service's Office of the Taxpayer Advocate, only 2.7 million of
the nearly 20 million Schedule C filers in tax year 2003 took a
deduction for home office expenses, despite the fact that some
8.4 million Americans indicated they had one or more rooms used
only for business."
Many business owners cite complexity of the criteria to qualify
as too cumbersome to follow; others also cite a fear being
audited as their reason to avoid the deduction. The National
Association for the Self Employed (NASE) recently conducted an online poll
revealing that three in five
business owners who had never utilized the current home office deduction said
the option of a standard deduction would encourage them to take
"Too many sole proprietors have shied away from taking the home
office deduction despite being eligible for it," said Kristie
Darien, executive director of the NASE legislative office. "The
option of a standard deduction would address all the barriers to
utilizing the home office deduction and allow qualifying
home-based businesses to employ this important tax benefit."
The option of a $1,500 standard deduction would not preclude
taxpayers currently qualifying for the home office deduction
from continuing to itemize their expenses should they choose.
The Home Office Deduction Simplification Act would simply offer
a taxpayer-friendly way to take the deduction. Additionally, if
passed by Congress, it would significantly minimize the
paperwork and time spent on tax preparation for entrepreneurs
managing their business out of their home.