Form 8829 is used to calculate the allowed expenses related to a self-employed taxpayer using their home space for business purposes. Business expenses incurred in the home can be deducted if:
- The part of the home used exclusively for business is the primary place of business, or
- The taxpayer meets with clients, patients, or customers there for business purposes. or
- The space is regularly used as a storage facility or a day care center.
If the taxpayer's business was carried on in more than one home during the year, create two Forms 8829. If the home was used for a business for only part of the year, only enter the expenses paid or incurred during the part of the year it was used for a business.
Completing Form 8829 in TaxSlayer ProWeb
To claim the expense on a Schedule C, first create the Schedule C that relates to the business. Click here for more information about creating a Schedule C in TaxSlayer ProWeb.
Within the Schedule C, from the Schedule C menu select Expenses for Business Use of Your Home, then again select Expenses for Business Use of Your Home.
- Home was used as Day Care Facility - Select Yes or No as appropriate. If yes, you'll also be asked to enter the number of hours a day the home was used as a day car facility, how many days per year it was used as a day care facility, and how many days it was available to be used as a day care facility. Additionally, you'll need to indicate if the area used as a day care facility included areas used exclusively for that purpose and/or partially used for that purpose.
- Part of Your Home Used for Business - Enter the amount of the home used exclusively for business purposes; partially for business purposes, if queried; and the total square footage of the home.
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Enter any net gain or loss NOT reported on this Schedule C - Enter here the net of these two items, if any:
- Any gain derived from the business use of the home and shown on Form 8949 (and included on Schedule D) or Form 4797;
- The total amount of any losses (as a positive number) shown on Form 8949 (and included on Schedule D) or Form 4797 that are allocable to the business, but not allocable to the business use of the home.
The next section is where you enter the expenses related to the home. It is important to understand the difference between direct and indirect expenses.
- Direct expenses benefit only the area exclusively used for business. These expenses are fully deductible. (Examples: cost of painting the area used only for business; cost of repairs to the area only used for business purposes.)
- Indirect expenses are those incurred for the entire home. The deductible portion is calculated by multiplying the amount of the expense by the business use percentage. (Examples: mortgage interest, home utilities, cost for replacing the roof on the house.)
When completing Form 8829, the program will deduct the direct expenses in full and automatically apply the business percentage to the indirect expenses.
- Casualty Losses - If the taxpayer is increasing their standard deduction by a net qualified disaster loss, don't make an entry here but instead claim the entire business use of the home portion of the casualty losses as Excess Casualty Losses. Otherwise, see the form instructions for the steps to follow to determine the amount to enter on this line.
- Deductible Mortgage Interest - If the taxpayer is claiming the standard deduction, don't make an entry here but instead claim the business use of the home portion of mortgage interest as Excess Mortgage Interest. Otherwise, if the taxpayer is itemizing deductions, see the form instructions for the steps to follow to determine the amount to enter on this line in the Indirect column. (Mortgage interest isn't entered in the Direct column, even if the taxpayer has a separate structure for their business.)
- Real Estate Taxes - If the taxpayer is claiming the standard deduction, don't make an entry here but instead claim the business use of the home portion of real estate taxes as Excess Real Estate Taxes. Otherwise, if the taxpayer is itemizing deductions, see the form instructions for the steps to follow to determine the amount to enter on this line and in which column.
- Excess Mortgage Interest - Only make an entry in the Indirect column. If the taxpayer is claiming the standard deduction, enter the entire home mortgage interest related to the home. (Don't include interest related to a home equity loan not used to improve the home.) If the taxpayer is itemizing deductions, see the form instructions to determine the amount to enter.
- Excess Real Estate Taxes - If the taxpayer is claiming the standard deduction, enter all the real estate taxes paid on the home in which business was conducted in the Indirect column. If the taxpayer is itemizing deductions and you calculated excess real estate taxes using the Worksheet for Line 11 in the instructions, enter the amount from that worksheet in the Direct column. Otherwise, don't make an entry here.
- Insurance - Enter the cost of insurance that covers the business part of the home.
- Rent - If the taxpayer is renting the home, enter the amount of the rent in the Indirect column.
- Repairs and Maintenance - Enter repair and maintenance costs in the appropriate column, depending on whether the repair benefits only the business portion of the home or the entire home. Take care to distinguish between repairs and improvements, that latter of which are capitalized rather than deducted. If in doubt, refer to Publication 587 for assistance.
- Utilities - Enter the utilities costs in the appropriate column. Utilities includes electricity, gas, trash removal, and cleaning services. It does not include telephone, as business-related telephone costs are deducted directly on Schedule C.
- Other Expenses - Enter any other expense related to the home not already included.
Excesses and Carryovers
- Carryover of operating expense from prior year's Form 8829 - Enter the carryover of operating expenses, if any, showing in Part IV of the last Form 8829 filed.
- Carryover of excess casualty losses and depreciation from prior year's Form 8829 - Enter the carryover of excess casualty losses and depreciation, if any, showing in Part IV of the last Form 8829 filed.
- Excess casualty losses -
- Casualty loss portion from above deductions -
Depreciation of your Home
The business portion of the home is depreciated as MACRS 39-year property, and you can either calculate this year's depreciation in this menu, or you can select to use the depreciation module to set up the home and depreciate it there. If using the module, be sure to enter the business use percentage.
If calculating this year's depreciation in this menu, enter the following information:
- Enter the smaller of your home's adjusted basis or its fair market value - Enter the smaller of the home's adjusted basis or its fair market value.
- Value of land included above - Enter the value of the land included in the previous amount.
- Date the home was first used for business - Enter the date the home was first used for business purposes.
- Accumulated depreciation - Enter the accumulated depreciation from prior years.
- Date home improvements were completed - If home improvements have been added in the current or prior years, select the month they were completed.
- Total amount of home improvements - If home improvements have been added in the current or prior years, the amount of the improvements.
- Home improvements accumulated depreciation - If home improvements are also being depreciated, enter the amount of accumulated depreciation from prior years.
What about partners in a partnership or farm owners?
A partner with self-employment income from a partnership, and a farm being reported on Schedule F, use the "Worksheet To Figure the Deduction for Business Use of Your Home " found in IRS Publication 587 rather than Form 8829. This worksheet is included in the Schedule K-1 (Form 1065) menu "Unreimbursed Partner Expenses Related to Self-Employment Earnings", and in the main Schedule F menu under "Business Use of Home Worksheet".
Note: This is a guide on entering Form 8829 in Schedule C TaxSlayer ProWeb. This is not intended as tax advice.
Additional Information
IRS: Instructions for Form 8829 - Expenses for Business Use of Your Home