The Small Business Tax Help Blog

Archive for the ‘Form 8829’ Category

Question: What amount gets entered on line 8 of the IRS Form 8829?

I’m a home-based employee, not self-employed, so I’m not filing a Schedule C. I’m confused about whether I enter the total from my W-2 or my Adjusted Gross Income (wages – standard deduction).
Any help would be appreciated! Thanks!!

Answer: You don't file Form 8829 if your use is as an employee. You'd claim it on schedule A as un unreimbursed employee business expense.

See the amount from Schedule C, line 29,

Home is where your office tax deduction is

NEW YORK #8212; Many people who received buyouts and severance packages last year used the money to start home-based businesses. Now they'll want to take tax deductions for their home offices.

Question: Can a renter claim Depreciation of Home as Business Expense?

On IRS form 8829, if I am a renter using a portion of my rental home for business, can I fill out part III of the form, claiming depreciation of the home for business, or must I skip over that part entirely?

Answer: If you do not own the property, you must not claim the depreciation. You are allowed to claim depreciation only for property that you own.

However, you can claim the rent on line 18.

On lines 9 (casualty losses), 10 (interest), 11 (real estate taxes), 16 (interest), 17 (insurance), 19 (repairs and maintenance), 20 (utilities), and 21 (other), deduct only what YOU paid. Do NOT deduct whatever was paid by the landlord or management company.

Home is where tax deduction is

Many people who received buyouts and severance packages last year used the money to start home-based businesses. Now, they'll want to take tax deductions for their home offices.

Question: Home office deduction for an LLC – what form to use?

When using Form 8829 (Expenses for business use of home), line 34 says to report value on 1040 Form C line 30. However, 1040 Form C is only for sole proprietorships. Where does that value get reported (which form) if my biz is a multimember LLC? If the answer is form 1065, won’t the other partners get partial credit for my home office deduction?

Thanks in advance!

Answer: Schedule A - employee business expenses -
see Publication 587

From IRS.gov

Topic 509 - Business Use of Home

Whether you are self–employed or are an employee, you may be able to deduct certain expenses for the part of your home you use for business despite the general denial of business expense deductions for the home.

To deduct expenses for business use of the home, part of your home must be used regularly and exclusively as one of the following:

The principal place of business for your trade or business;
The place where you meet and deal with your patients, clients, or customers in the normal course of your trade or business; or
In connection with your trade or business, if you use a separate structure that is not attached to your home.

Where the exclusive use requirement applies, you cannot deduct business expenses for any part of your home that you use for both personal and business purposes. For example, if you are an attorney and use the den of your home to write legal briefs and also for personal purposes, you may not deduct any business–use–of–your–home expenses. Further, under the principal-place-of-business test, you must determine that your home is the principal place of your trade or business after considering where your most important activities are performed and most of your time is spent, in order to deduct expenses for the business use of your home.

Deductions also may be taken for regular use of a residence for the provision of day care services or for business storage purposes; exclusive use is not required in these cases. You also may take deductions if you rent out your residence. For more information, see Publication 587

Deductible Expenses for business use of your home include the business portion of real estate taxes, deductible mortgage interest, rent, casualty losses, utilities, insurance, depreciation, maintenance and repairs. You may not deduct expenses for lawn care in general or for painting a room not used for business.

When figuring the amount you can deduct for the business use of your home, you can use the entire amount of expenses attributable solely to the portion of the home used in your business. The amount you can deduct for expenses attributable to the whole house depends on the percentage of your home used for business. To figure this percentage, you may divide the number of square feet used for business by the total square feet in your home. Or, if the rooms are approximately the same size, divide the number of rooms used for business by the total number of rooms in your home. You figure the business portion of your expenses by applying this percentage to the total of each expense. If you are a qualified day-care provider who does not use any area exclusively for day care, your business portion is further limited by the ratio of the number of hours the area is used exclusively for business to the total number of hours the portion was available for any use.

If your gross income from the business use of your home is less than your total business expenses, your deduction for certain expenses for the business use of your home, other than mortgage interest, taxes, casualty losses, and the like is limited. However, those business expenses that can not be deducted because of the gross income limitation can be carried forward to the next year but will be subject to the deduction limit for that year.

If you are in the business of farming or are an employee, use the worksheet in Publication 587 , Business Use of Your Home, (including use by daycare providers) to figure your deduction. As an employee, you must itemize deductions on Form 1040, Schedule A (PDF) to claim expenses for the business use of your home. Farmers claim their expenses on Form 1040, Schedule F (PDF). If you are self–employed, use Form 8829 (PDF) to figure your business–use–of –the–home deductions and report those deductions on Form 1040, Schedule C (PDF).

Publication 587 has detailed information on rules for the business use of your home, including how to determine if your home office qualifies as your principal place of business.

Small Talk: Know the rules for home-office deduction

The deduction for using part of your home for business purposes—popularly known as the home-office deduction—used to be something scary. It was widely believed that taking the deduction would automatically bring an IRS audit. Tax advisers say that’s no longer the case, especially because there are so many businesses being run out of homes, garages and apartments. But if you don’t follow the ...

Question: letter from irs regarding Form 8829 injured spouse?

this is the second letter we have gotten…..we know the amount we are going to get,…..it left an 800 number, an automated irs recording, i tried it but nothing…..the letter says your refund may have already been direct deposited, or mailed to you…please allow 2 weeks………is there any way we can track this???when we initially filed, we filed jointly, i got nailed, so therefore my wife filed the injured spouse, but yet on the letter from irs….it had my name, and ssn…..but the letter was adressed to my wife………i tried the automated deal to get an estimated delivery time….but it wouldnt go through…..do we need to use my wifes ssn?

Answer: If your name was first on the return, then it's indexed under your SSN--which is why you enter your ssn.

Since your wife filed form 8379 for injured spouse, presumably that's why the letter was addressed to her.

The IRS doesn't consider checks to be late until 2 weeks from the date they are mailed. At that time call 1-800-829-1040 and ask to be connected to accounts. If you don't have the check by then it can be cancelled/traced/reissued, but that takes time as well.

Making Your Home Office Deduction Stick

Proper documentation could be your saving grace in case of an audit.