Who Uses IRS Form 8829?
Self-employed taxpayers and small business owners can use Form 8829 to claim the home office deduction if they meet two criteria:
Your workspace must be the “principal place of your business,” according to the IRS. You run your operation from there, although you can leave to perform the work your business requires.Your workspace cannot be used for anything other than that—running and managing your business. The space you claim for a deduction can’t do double duty as a bedroom or a family room. You can use a portion or corner of a room as a home office as long as you exclusively dedicate that area.
Where To Get Form 8829
IRS Form 8829 is available on the IRS website. You can complete it online and print it out, or you can download a copy. The self-employed versions of most tax preparation software will also complete the form for you, as well as your Schedule C.
How To Fill Out Form 8829
Form 8829 consists of four parts: Part I, Part II, Part III, and Part IV.
Part I
Part I of Form 8829 calculates the percentage of your home that’s dedicated to your work. It asks you to describe the part of your home that you use. Determine the square footage of the area you use for business, then divide that by the total square footage of your home to arrive at a percentage. For example, your home business would take up 10% of your total home area if your workspace is 200 square feet and the total area of your home is 2,000 square feet.
Part II
Part II of Form 8829 calculates the deduction of your home expenses. First, enter the tentative profit from Line 29 of Schedule C, then enter:
Direct expenses, such as rent and utilitiesIndirect expenses for casualty losses, deductible mortgage interest, and real estate taxes if you own your home
Multiply the total by the percentage of your home devoted to your business on Line 7. You can then deduct:
Excess mortgage interestInsurance costsRentRepairs and maintenanceUtilitiesOther expenses
Part III
Use Part III to calculate depreciation on your home so it can be allocated to your home business according to the percentage on Line 7. You’ll enter the total amount of depreciation on Line 30.
Part IV
Part IV applies to the carryover of unallowed expenses. Some of these expenses might have to be carried over to the next tax year. Consult with a tax professional to determine if this applies to you and your business.
Can Form 8829 Be E-Filed?
Form 8829 accompanies Schedule C with your 1040 tax return so that you can e-file it along with these documents. If you work with a professional tax preparer, many of them are also authorized, e-file providers. Tax software will e-file your return and attachments for you, or you can use IRS Free File to prepare your return and e-file it if your adjusted gross income (AGI) was $73,000 or less for the current tax year.
Where To Mail Form 8829
You can mail your tax return and its accompanying schedules and forms if you prefer not to e-file. The address you’ll use depends on your state of residence. The IRS provides a state-by-state list online.
Tips for Completing Form 8829
There are several steps you can take to support your home office deduction:
Make sure there’s nothing in your work area that’s not related to your business when you measure the square footage of your business space.Take several photos of the area from different angles, so it’s clear that the area is used exclusively for business.Time and date the photo and keep a copy of it in a safe place.Don’t include bathrooms, the garage, or the basement unless it’s furnished when you’re calculating the full square footage of your home.Keep the measurements in a safe place or in your tax file.
A real estate agent’s listing from when you purchased the home, or any legal document that includes its square footage, will help to verify the total square footage of your home. Your landlord will most likely have this information on hand if you rent your home. Otherwise, get a good measuring tape and take measurements of each room. Collect information on home expenses for the year, including property tax payments, mortgage interest statements, utility bills, homeowners insurance, rent payments, repairs, and maintenance expenses. You don’t necessarily have to complete Form 8829 to claim this deduction. The IRS offers a simplified home office deduction method for small home offices of up to 300 square feet. You can simply multiply the square footage of your workspace and multiply it by $5.
