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John F. O'Hara

John F. O'Hara
731 W Skippack Pike  Blue Bell  PA 19422
Phone:  610-277-4060
Office:  215-643-3200
Cell:  267-481-1786
Fax:  267-354-6973

My Blog

How to Claim the Home Office Deduction

March 25, 2015 12:24 am

Taxpayers with home-based businesses filing their 2014 federal income tax returns can choose a simplified method for claiming the deduction for business use of a home, according to the Internal Revenue Service (IRS). Nearly 3.4 million taxpayers claimed the home office deduction in tax year 2012, totaling more than $10 billion in deduction.

Normally, home-based businesses are required to fill out a 43-line form (Form 8829) often with complex calculations of allocated expenses, depreciation and carryovers of unused deductions. Instead, taxpayers choosing the simplified method need only complete a short worksheet in the tax instructions and enter the result on their tax return. Self-employed individuals claim the home office deduction on Schedule C, Line 30; farmers claim it on Schedule F, Line 32; and eligible employees claim it on Schedule A, Line 21.

Introduced in tax year 2013, the optional deduction is designed to reduce the paperwork and recordkeeping burden for small businesses. The optional deduction is capped at $1,500 per year, based on $5 a square foot for up to 300 square feet.

Though homeowners using the simplified method cannot depreciate the portion of their home used in a trade or business, they can claim allowable mortgage interest, real estate taxes and casualty losses on the home as itemized deductions on Schedule A. These deductions need not be allocated between personal and business use, as is required under the regular method.

Business expenses unrelated to the home, such as advertising, supplies and wages paid to employees, are still fully deductible. Long-standing restrictions on the home office deduction, such as the requirement that a home office be used regularly and exclusively for business and the limit tied to the income derived from the particular business, still apply under the simplified method.

Source: IRS.gov

Published with permission from RISMedia.


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Why Are We So Mad about March Madness?

March 24, 2015 2:18 am

In the world of sports and competition, March Madness holds a special place in the hearts of basketball fans. Millions of Americans are getting ready to take part in the chaotic tradition of betting on teams and fueling rivalries with colleagues, friends, and family. But what's behind this synchronized frenzy?

Dr. Pamela Vincent, psychology faculty at Ashford University, offers insight into the manic behavior that led to the term March Madness:

It's Only Natural – Humans have an innate drive toward competition, a leftover trait stemming from times when it was necessary to compete for food, shelter, and mates in order to survive. Although the need to hunt for food and safety aren't there to the same extent today (in most cases), we still enjoy that competitive spirit when it comes to things like sports.

A Slam Dunk – It's easy to throw $5 into an office pool during March Madness because there's the outside chance that you might win the whole pot without really having to do any hard work. It's even easier to understand why the person who won last year (or the person who is just coming down from the office's fantasy football season win) would throw some money into the game. He or she has already seen the rewards for joining in, and is therefore reinforced to try their luck again. Reinforcement suggests that when a behavior is rewarded, we are more likely to repeat it. So, if you take a gamble on a game and win, you are more likely to gamble on the next game.

The Thrill of the Chase – Betting is based on a variable partial reinforcement schedule, meaning that you can't really predict when you'll be rewarded again. Imagine that you knew you'd win every third year. Well, there's really no reward in playing during years one, two, four, or five because you know you won't earn a return on your investment. But with betting, you never know which bracket will be your lucky one or which year your team will to make it to the end, so you are even more likely to compete due to the inconsistent reward system.

The Ball's in My Court – So why do those who have no real stake in the games and perhaps choose teams based on fun mascots or colorful uniforms get involved in the tradition? First, if you are competing within a small office, you may be influenced by the "availability heuristic," which suggests that we tend to overestimate our likelihood of winning. You see 30 people in your office and figure, "Well, somebody has to win – why not me?" For the notorious annual "losers" who over-analyze, pick all of the wrong upsets and end up with only three out of the top 32 each year, there is the "gambler's fallacy" in which a person feels that he or she is overdue for a win despite all other factors in the game.

Very Superstitious – Another interesting aspect of gambling during March Madness is the superstition that comes into play. This behavior ranges from wearing the same socks while watching a favorite team to making your friend leave the room so your team can score. Logically, we know that these behaviors have absolutely no effect on whether or not a foul shot is made or a rebound is caught, but when things occur outside of our control, we either choose to avoid the anxiety-producing events or establish methods of coping with them. In other words, we create our own semblance of control and finding the most rational or predictable element in our environment.

So, will drinking a chocolate shake during every game help someone finally win this year? "Not likely," said Vincent. "But hey, there's no bad excuse for a chocolate shake and just maybe this time you'll have the lucky bracket."

Source: Ashford University

Published with permission from RISMedia.


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