Business Use of Home - Form 8829

Entering Form 8829 Business Use of Home on the Desktop

Allowed expenses associated with the taxpayer using their homes to carry out businesses are calculated using Form 8829. Deductions of the expenses of the business incurred in the home can be made if: 

• The primary business place is the portion of the home used for business 
• The taxpayer interacts with their clients, patients or customers there for business reasons 
• The place is regularly used as a facility for storage or as a daycare centre 

In order to claim the expenses on Schedule C: 

• Create a Schedule C that relates to the business 
• Within that Schedule C, go to the Schedule C - Edit Menu
• From that menu, select Form 8829 (Business Use of Home) 
• A different Form 8829 is required for every home utilized for business purposes. Either select New or double click on the entry that you would like to edit. 
• Area of Home Used for Business - Enter the amount of space used for business. There are various methods of calculating this area. The IRS is only concerned with the reporting of the percentage of use. The Square footage method proves to be the easiest method for the calculation of the area. 
• Total Area of Home - the number entered should be that of the total space covered by the home, including the business area. 
• Number of Hours the Home is used for Day Care per Day - Enter the number of hours that the place is used for day care purposes in a day. For instance, if it operates between 7am-7pm daily, then enter 12 on this line. 
• Number of Days per Year the Home is used for Day Care - Enter the number of days that the home is open for day care. For instance, If it is open from Monday to Friday and closed for two weeks during the summer, you will enter 250 (50 weeks x 5 days per week). This is if the home is used for day care. 

You will enter expenses that are related to the home in the next window. As you enter these expenses, it is of great importance that you have knowledge of the difference there is between direct and indirect expenses. 

• Direct Expenses - These only benefit the place exclusively used for the business. Such expenses are fully deductible. Examples include the amount used for painting the place, the cost of repairs for the place among others. 
• Indirect Expenses - These are expenses incurred for the entire home. These are only deductible depending on the business use percentage. Examples include Mortgage Interest, home utilities, etc. 

The program automatically applies the business percentage to the amounts that are entered in the “Indirect Expense” column and subtract the business portion of the expense on Form 8829. 

Business Use of Home before 2018 

Before the tax year 2018, Form 8829 was accessed either through Schedule C if the taxpayer claimed the expense or through Schedule A if the expense was an itemized deduction. From the tax year 2018 onwards, Form 8829 is accessed only through Schedule C. You can still access the Business Use of Home Worksheets in the Itemized Deductions menu. However, they can only be used to carry the deduction to a state return that may allow it. 

Before 2018, unused parts of some expenses could be carried back to Schedule A as itemized deductions. The program will require you to enter mortgage interest amounts or real estate taxes you wish to carry to Schedule A when you leave the Form 8829 menu. If Itemized deductions will be included in the return, enter the amounts to be carried to Schedule A here. If not, leave this page blank. 

To claim the expense as an itemized deduction on Schedule A before 2018; 

• Go to the Main Menu of the tax return (Form 1040) 
• Select Itemized Deductions Menu 
• Then 2% Deductions & Job Expenses (2106) 
• Finally, select Business Use of Home Worksheet 

Additional Information

Instructions for Form 8829 - Business Use of Home.