Home Office Deduction

#Home Office Deduction

up to $1,500 a Year Publication 587 

• Where on what forms do I  Deduct Business Use of the home?
  • Deduct expenses for the business use of your home on Form 1040 or Form 1040-SR. Where you deduct these expenses on the form depends on whether you are a self-employed person or a partner.
• Self-Employed Persons
  • If you use your home in your trade or business and file Schedule C (Form 1040 or 1040-SR), report the entire deduction for business use of your home
  • Whether you need to complete and attach Form 8829 to your return depends on how you figure your deduction. See Line 30 in the Instructions for Schedule C for more information. ^{IRS 587} *
• Schedule C Line 30 Business Use of Home

8829 Expenses for Business Use of Home

•  Home Office Deduction
  • If you use your home for business, you may be able to deduct expenses for the business use of your home. If you qualify, you can claim the deduction whether you rent or own your home. You may use either the simplified method or the regular method to claim your deduction.
• Regular and Exclusive Use.
  • As a general rule, you must use a part of your home regularly and exclusively for business purposes. The part of your home used for business must also be:
    • Your principal place of business, or
    • A place where you meet clients or customers in the normal course of business, or

A separate structure not attached to your home. Examples could include a garage or a studio.

• Simplified Option. If you use the simplified option, multiply the allowable square footage of your office by a rate of $5. The maximum footage allowed is 300 square feet. This option will save you time because it simplifies how you figure and claim the deduction. It will also make it easier for you to keep records. This option does not change the rules for claiming a home office deduction.
• Regular Method. This method includes certain costs that you paid for your home. For example, if you rent your home, part of the rent you paid may qualify. If you own your home, part of the mortgage interest, taxes and utilities you paid may qualify. The amount you can deduct usually depends on the percentage of your home used for business.
  • Self-employed taxpayers file Form 1040,  Schedule C, and compute this deduction on Form 8829.
• Deduction Limit. If your gross income from the business use of your home is less than your expenses, the deduction for some expenses may be limited.
• Self-Employed.
• If you are self-employed and choose the regular method, use
• Form 8829, Expenses for Business Use of Your Home, to figure the amount you can deduct.
• You can claim your deduction using either method on Schedule C, Profit or Loss From Business.
• See the Schedule C instructions for how to report your deduction.
• Employees.
• You must meet additional rules to claim the deduction if you are an employee. For example, your business use must also be for the convenience of your employer. If you qualify, you claim the deduction on Schedule A, Itemized Deductions.

For more on this topic, see Publication 587, Business Use of Your Home.  Scroll down or it’s in the right hand column

Simplified Method for Home Office Deduction

There are special rules for certain business owners:

• Daycare providers complete a special worksheet, which is found in Publication 587.
• Self-employed individuals use Form 1040, Schedule C, Line 30 to claim deduction.
• Farmers claim the home office deduction on Schedule F, Line 32.

FAQ

• The person who prepared my Tax Return used Schedule C – Profit or Loss from Business for my Home Business expenses as a day care provider instead of the 8829 Expenses for Business Use of your home Form, which resulted in the State (not the federal) disallowing all of my deductions.
  • Does a 8829 have to be used in order to receive my full refund after I amend, or should the Schedule C be suffice?
  • Covered CA does not allow agents to give tax advice, here’s their recommendations to get assistance
  • See Tip # 3 above and page 12 of Publication 587 and simplified worksheet on page 24 check the index too
    • Tax a look though at the forms and I think you will see the answer!