Bill would create standard deduction for business owners with home offices

A bipartisan group of lawmakers introduced a bill that will simplify the process of filing tax returns for small business owners who work from their homes by creating a standard $1,500 home office deduction.

The Helping Our Middle Class Entrepreneurs (HOME) Act, introduced last week by U.S. Sens. John Boozman (R-AR) and Tom Udall (D-NM) and U.S. Rep. Michelle Lujan Grisham (D–NM), is designed to reduce red tape and support business growth.

Through the HOME Act, business owners who operate primarily from their homes have the option to take a standard home office deduction of $1,500 rather than filing the usual paperwork and deductions that accompanies working from home.

While the Internal Revenue Service (IRS) created a temporary standard home office deduction in 2013, the HOME Act would make the home office deduction permanent.

Half of all U.S. companies are home-based, according to the Small Business Administration and the National Federation of Independent Business, yet fewer than 50 percent of take home office deductions because the process is so complex.

“Small businesses are the backbone of our economy. We can support these job creators by reducing the regulatory burden they face and delivering predictability for them to plan for future growth and success,” Boozman said.  

Udall said it is incumbent upon the federal government to make it easier for entrepreneurs to succeed.

“The HOME Act is a common-sense, bipartisan bill that rolls back some of the red tape that creates burdensome paperwork for business owners throughout New Mexico and the nation, enabling them to focus on growing their businesses, creating good jobs and stimulating our economy,” Udall said.

The IRS said this change will reduce the paperwork burden by over a million hours annually.

“I am proud to introduce the HOME Act which will fix this problem so that New Mexico small business owners can focus on growing their businesses, creating jobs and strengthening our economy,” Lujan Grisham said.