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Home Office Deduction Worksheet for Employees

Tax Year 2013

 

This worksheet is used to calculate the allowable home office deduction for expenses of the taxpayer's home when the taxpayer is an employee and add them to the Schedule A worksheet.

 

There are several rules and regulations associated with the Home Office Deduction. See Home Office Deduction Rules for Employees and IRS Pub. 587, Business Use of Your Home for more details.

 

Where to report Home Office Expenses
Use the following worksheets to report Home Office Expenses according to the taxpayer's employment status and/or business ownership:

  • As an employee: Schedule A, Home Office Deduction worksheet
  • As a statutory employee: Schedule C, Form 8829 worksheet
  • As a self-employed proprietor: Schedule C, Form 8829 worksheet

Example 1: The taxpayer is filing a Schedule C for his business and has home office expenses associated with this business. The taxpayer will report these expenses on Form 8829 of the Schedule C.

Example 2: The taxpayer is filing a return that has W-2 income from his or her employer. The taxpayer maintained a room in the home used exclusively for work provided to the employer several days a week. The taxpayer would use the Home Office Deduction worksheet on the Schedule A.

 

How to add the Home Office Deduction worksheet
Click on the Home Office Deduction Worksheet link on line 21 of page 4 in the Schedule A worksheet, and the Employee Home Office Deduction worksheet will open. Open the Taxpayer link to enter the taxpayer's expenses as an employee, and open the Spouse link to enter the spouse's expenses as an employee.

Directions
Directions for entering information into the Home Office Deduction worksheet are as follows:
Part 1 - Part of the Home Used for Business
Lines 1 and 2 Line 1
Enter the measured area (explained below) of the home that is used regularly and exclusively for the taxpayer's employment (with the exception of inventory storage which requires only regular use when the other requirements for this deduction are met).

 

Line 2
Enter the measured area of the entire home.

 

How to measure area
The area of the home is the number of linear feet of the width of the room times the linear feet of the length of the room. In other words, the square feet of the room. For odd-sized rooms (not square), the taxpayer may locate the square feet area on a house or apartment plan.

 

Alternative measurements
The taxpayer could use units of measurement other than area, such as the number of rooms if all of the rooms in the home are approximately the same size. However, lines 1 and 2 must be the same unit of measurement. Do not use the square foot area for one measurement and the number of rooms for another measurement. Other methods of determining area may be used, however, they must be reasonable.

 

Calculation of Business Percentage Use
The percentage of business use of the home is automatically calculated when the user enters information into lines 1 and 2 of the Form 8829 worksheet.

 

Example 1:

  • The taxpayer's office is 240 square feet (12 feet × 20 feet) and is entered on line 1.
  • The taxpayer's home is 1,200 square feet and is entered on line 2.
  • The taxpayer's office is 20% (240 ÷ 1,200) of the total area of the home.

The taxpayer's percentage of business use is 20%.

 

Example 2:

  • The taxpayer uses one room in the home for business, and "1" is entered on line 1.
  • The taxpayer's home has 10 rooms, all about equal size, and "10" is entered on line 2.
  • The taxpayer's office is 10% (1 ÷ 10) of the total area of the home.

 

The taxpayer's business percentage is 10%.

Part II - Figure the Allowable Deduction

 

General directions applicable for both columns
Only enter expenses related to the business use of the taxpayer's home. Do not enter expenses not allocable to the business use of the taxpayer's home, such as salaries, supplies, postage, and business telephone expenses, which are deductible elsewhere on line 21 of Schedule A and should not be entered on this worksheet.

 

If the taxpayer did not use his home for employment for the entire year, the taxpayer can only deduct the expenses paid or incurred for the portion of the year the taxpayer used the taxpayer's home for employment.

 

Column (A) Direct expenses
Enter 100% of the allowable expenses that directly benefit only the business part of the taxpayer's home. Direct expenses include painting or repairs made to the specific area or rooms used for business. These deductions are expensed for the full amount.

 

Column (B) Indirect expenses
Enter 100% of the allowable expenses for keeping up and running the taxpayer's entire home. Indirect expenses benefit both the business and personal parts of the taxpayer's home. These deductions are expensed by the percentage of business use of the home and this calculation is automatically made.

 

Exception from directions above: If the business percentage of an indirect expense is different from the calculated percentage of use of the home, enter only the business part of the expense on the appropriate line in column (A), and leave that line in column (B) blank. For example, the taxpayer's electric bill is $800 for lighting, cooking, laundry, television, and all other personal uses. If the taxpayer reasonably estimates $300 of the taxpayer's utility bill is for lighting, and the taxpayer uses 10% of the taxpayer's home for business, enter $30 on line 18 in column (a). Do not make an entry on line 18 in column (b) for any part of the taxpayer's electric bill.

 

Limit on Deduction
If the taxpayer's gross income from the business use of the home equals or exceeds the total business expenses (including depreciation), the taxpayer can deduct all business expenses related to the use of the home.

 

If the taxpayer's gross income from the business use of the home is less than the total business expenses, the deduction for certain expenses for the business use of the home is reduced. See Calculation of Reduced Deduction in the Home Office Deduction Rules for Employees for details.

Line 4

Gross Income
Enter the total income earned during the tax year that are related to the business use of the home.

Line 6

Deductible Mortgage Interest
Enter only the amount of mortgage interest that would also be deductible on Schedule A.

 

Do not enter any expenses that were already entered into the Schedule A worksheet or anywhere else on the return.

Line 7

Real Estate Taxes
Enter only the amount of real estate taxes that would also be deductible on Schedule A.

 

Do not enter any expenses that were already entered into the Schedule A worksheet or anywhere else on the return.

Line 11 Business Expenses not from Business Use of Home
Enter other business expenses not related to the use of the home such as unreimbursed travel, supplies and business telephone expenses.

 

Do not enter any expenses that were already entered into the Schedule A worksheet or anywhere else on the return.

Line 15 Insurance
Enter the taxpayer's insurance premiums paid during the tax year.

 

Enter the full amount of insurance premiums for the home in column B. If extra insurance premiums were paid for the home solely because of the business use of the home, enter those amounts in column A.

Line 16 Rent
Enter the rent the taxpayer paid during the tax year.

 

Enter the full amount of rent paid for the home in column B. If extra rent was paid for the home solely because of the business use of the home, enter those amounts in column A.

Line 17

Repairs and Maintenance
Enter the cost of repairs and maintenance.

 

Enter the full amount of general repairs and maintenance (example: painting outside of house) in column B. Enter specific repairs and maintenance to only the portion of the home used for the business (example: painting office) in column A.

 

Do not enter specific repairs and maintenance to other areas of the home (example: painting bedroom).

Line 18 Utilities
Enter the utilities cost. See the Exception note above in Part II.
Line 19 Other expenses
Enter any additional operating expenses not included on lines 6 through 18 that are exclusively and regularly used for business and are related to the home.
Line 22 Carryover from Operating Expenses
Enter any carryover operating expenses for the taxpayer's business use of the home that was not allowed in the previous year.

 

This information should be found in the taxpayer's records for the previous return on the Worksheet to Figure the Deduction for Business Use of Your Home.

Line 28 Carryover of Depreciation
Enter any carryover of excess casualty losses and depreciation from the taxpayer's business use of the home that was not allowed in the previous year.

 

This information should be found in the taxpayer's records for the previous return on the Worksheet to Figure the Deduction for Business Use of Your Home.

Part III - Depreciation of the Taxpayer's Home
Line 34 Enter the lesser of the cost or other basis of the taxpayer's home or the fair market value of the taxpayer's home on the date the taxpayer first used the home for his employment.

 

Do not adjust this amount for depreciation claimed, or changes in fair market value after the year the taxpayer first used the taxpayer's home for employment.

Line 35 Enter the lesser of the cost or other basis of the land or the fair market value of the land on the date the taxpayer first used the home for employment that is included in the total above.

 

Do not include amounts for land that are not included in the amount above, or adjust this amount for depreciation claimed, or changes in fair market value after the year the taxpayer first used the taxpayer's home for employment.

Line 38 Enter the date the business use of the home began.
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