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11781: Form 8829 - Office in Home


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Form 8829 - Office in Home

 

Note: This article covers the standard method only. For information on the Simplified Method (or Safe Harbor method), see "Office in Home (OIH) - Simplified Method" in Related Links below.

Use screen 8829 to report expenses associated with an office in the taxpayer's main home. Form 8829 is produced only when directed to a Schedule C using the For drop list at the top of the screen.

Screen 8829 also can be directed to a Schedule F, Form 2106 or to a K1P, in which case View/Print mode produces Wks 8829 rather than Form 8829.

When you direct screen 8829 to a:

  • Schedule C or F, if you haven't created the form, open screen C or F, select T or S from the TS drop list, and complete any additional entries needed.
  • K1P:
    • If you haven’t created the K1P, open screen K1P, select T or S from the TS box drop list, and complete any additional entries needed.
    • The literal "UPE” (Unreimbursed Partnership Expenses) appears on line 28(b) of Schedule E Part 2.
  • Form 2106:
    • If you haven’t created the 2106, open screen 2106, select T or S from the TS box drop list, and complete any additional entries needed.
    • Mortgage interest and taxes flow directly to Schedule A, not to Wks 8829 (see “Form 8829 - Home Mortgage, Taxes for a 2106 are on Schedule A but not Wks 8829” in Related Links below).
    • 8829 Multi-form Code for Form 2106: If the 8829 is for a taxpayer's 2106, enter 1 in the Multi-form code field. If the 8829 is for a spouse's 2106 and the taxpayer does not have a 2106, enter 1 in the Multi-form code field. If the 8829 is for a spouse's 2106 and the taxpayer has a 2106, enter 2 in the Multi-form code field. If the 8829 is for a spouse's 2106 and the taxpayer has two 2106s (which prevents e-filing), enter 3 in the Multi-form code field.

Part I of screen 8829

For exclusive business use areas, complete fields

  • 1 Square feet of home used exclusively for business
  • 2 Total square feet of home

The software calculates the percent business use for line 7.

For part-time business use areas (day care activities that qualify for the exception to exclusive use), complete fields

  • 2 Total square feet of home.
  • 1, 4, and 5 in the Day Care Facilities Only area.

The software calculates the percent business use for line 7.

For day care activities that involve both exclusive and part-time use, either enter the data and let the software calculate the combined business use percentage, or calculate that percentage manually and enter the result as an override.

To have the software calculate the percentage, complete fields 1 and 2 as above for exclusive business use areas, and complete fields 1, 4, and 5 in the Day Care Facilities Only area as above for part-time business use areas. The software calculates the percent business use for line 7, produces the required statement explaining the calculation, and annotates line 7 on the 8829:

 

 

To override line 7 with your own percentage calculation, enter your calculated percentage in field 7 in the Day Care Facilities Only area. For example, enter 6.25% as 6.25. If you use the override, you must also prepare an explanatory statement. Click SCH to open a worksheet to add the required explanation of the percentage figure. From the Type of attachment/statement number and title drop list select 775 – 8829, Ln 7, Business Percent and enter an explanation. In view, confirm that the software has annotated line 7.

Part II of screen 8829

Direct Expenses. Direct expenses are entirely attributed to the business activity in the home.

Indirect Expenses. Indirect expenses are for the entire home, which the software allocates between business and non-business use based on the ratio derived in Part I. On lines 9, 10 and 11 enter only expenses that would otherwise be deductible. That part allocated to personal use will flow to Schedule A, unless you check the option Do not carry personal portion of interest and taxes to Schedule A. Note on casualty losses:  For line 9 entries, review the calculated results in View/Print mode for line 34 of Form 8829. IRS Instructions for Form 8829 for line 34 direct that amount to be entered on line 27 of Form 4684. In that event, you must prepare Form 4684 manually and paper file the return.

Part III of screen 8829

Enter home depreciation data in this section or on a screen 4562 that points to Form 8829.

Entering home depreciation data in Part III.

Review the help screens for information about data entry.

Do not enter depreciation data in Part III for a home placed in service in the current year if you expect to have section 179 expense in this return from this or another activity. Enter the data on screen 4562 instead, or the return will be rejected if e-filed. When the date placed in service is the current year, a Form 4562 is produced that interferes with handling section 179 expense. For an explanation, see “Errors 5570, 1105, 1106 and 1107” in Related Links below.

Entering home depreciation data on screen 4562.

Follow the tax year 2015 example below. The example uses the following figures: the smaller of basis or FMV is $50,000, the value of the land is $5,000, and the date placed in service is 5/5/2015.

Field Entry Explanation
FOR 8829 Directs output to Form 8829
DESCRIPTION HOME OFFICE The description can vary.
DATE ACQUIRED 05052015 Current year produces Form 4562.
COST 50000 Lesser of basis or fair market value. Do not include land cost - you can track land cost by entering it in the Land Cost field on screen 4562.
BUSINESS % USE Leave blank. Business allocation occurs on 8829.
METHOD SL Home used for business after 05/13/93, but see Pub. 946, how to Depreciate Property, and 587, Business Use of Your Home, for other methods.
LIFE 39 Home used for business after 05/13/93, but see Pub. 946 and 587 for other lives.
MAIN HOME FOR FORM 8829 Select this option. This option ensures deductible mortgage interest and taxes are properly handled.
LAND COST 5000 You can enter land cost here to track it.

For more information on entering depreciation for an office in the home, see "Figuring Home Depreciation on Form 8829" in Related Links below.

Note: ​Enter each office in home on a separate 8829 screen with the correct square footage entered on lines 1 and 2 of each screen.  Apportion expenses in either the direct or indirect field for the time the office was used during the tax year. 


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