The Friendly Guide to Tax Form 8829 – Expenses for Business Use of Home

March 27, 2015


Form 8829, Expenses for Business Use of Home, is a tax form you fill out to claim your home office expenses (so if you work from home—this means you).

The form can be a little daunting, especially since it references other forms, but don’t stress just yet. Below you’ll find a line-by-line breakdown of what everything means (in plain English). You can access Form 8829 below along with information on each section.

This is intended as a guide only, and links to the IRS’ full instructions have been included. Since each business is unique if you have any specific questions it is always best to talk to an accountant.

Form 8829 – Expenses for Business Use of Home

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PART I – Part of Your Home Used for Business
Line 1
Line 2
Line 3
Line 4
Line 5
Line 6
Line 7

PART II – Figure Your Allowable Deduction
Line 8
A Note on Column (b) and Column (b)
Line 9
Line 10
Line 11
Line 12
Line 13
Line 14
Line 15
Line 16
Line 17
Line 18
Line 19
Line 20
Line 21
Line 22
Line 23
Line 24
Line 25
Line 26
Line 27
Line 28
Line 29
Line 30
Line 31
Line 32
Line 33
Line 34
Line 35

PART III – Depreciation of Your Home
Line 36
Line 37
Line 38
Line 39
Line 40
Line 41

PART IV – Carryover of Unallowed Expenses to 2015
Line 42
Line 43

 

PART I – Part of Your Home Used for Business

Line 1 – Enter the area of your home used regularly and exclusively for your business. The IRS recommends using square-footage but you can use any reasonable method – for example you could use square meters if you prefer.

Line 2 – Enter the total area of your home. You have the use the same form of measurement you used in Line 1. The IRS’ website has more info.

Line 3 – Divide Line 1 by Line 2 and then multiply the result by 100. This will give you the percentage of your home that is used for business purposes. Enter that percentage on Line 3.

Line 4 – If your home was used as day care enter the total number of hours it functioned as a day care in Line 4. Do this by multiplying the number of days you ran the daycare by the number of hours it functioned as a daycare each day. If it wasn’t used as a day care skip this line and go to Line 7. For more info check out the IRS’ guide.

Line 5 – Already filled out for you

Line 6 – Divide Line 4 by Line 5. If you didn’t run a day care you can skip this Line.

Line 7 – If you didn’t run a daycare enter the value of Line 3 on Line 7. If you did run a daycare multiply the value of Line 6 by the value of Line 3.

PART II – Figure Your Allowable Deduction

Line 8 – This Line can be a bit complicated. Most people simply need to enter the value of Line 29 from their Schedule C onto this Line 8 of Form 8829. If you had any capital gains or losses though from the business use of your home, you have to account for them here. If you work from home as well as from another location, you have to enter the percentage of Line 7 from your Schedule C that represents the percentage of income earned from home. Check out the IRS’ site for more information and to help clarify your specific situation.

Column (a) and Column (b): Direct and Indirect Expenses –  Column (a) represents expenses that you incurred specifically for the business portion of your home and only benefit the business portion of your home. For example if you painted your office that would be a direct expense. Column (b) represents expenses you incurred that benefit both the business portion of your home and the personal portion of your home. An example would be your electricity bill – electricity is used for both personal and businesses uses in your home. Generally, enter 100% of indirect expenses in column (b) – in other words, enter the entire electricity bill delivered to your home. The IRS’ guide has more information.

Line 9 – If you have losses from casualty and are filling out Form 4684 then you’ll need to fill out this line. For more instructions see the IRS’ website.

Line 10 – This is where you would enter interest paid on your mortgage. It is considered an indirect expense unless you have mortgage interest specifically for a separate structure you use to run your business. Since you can also claim mortgage interest on your Schedule A it is worth looking into the IRS rules about how to manage the two.

Line 11 – This is where you would enter any real estate taxed you have paid. It is considered an indirect expense unless you have real estate taxes specifically for a separate structure you use to run your business. Since you can also claim real estate taxes on your Schedule A it is worth looking into the IRS rules about how to manage the two.

Line 12 – Add the totals in the (a) column for Lines 9, 10, and 11. Enter the total in Line 12a. Add the totals in the (b) column for Lines 9, 10, and 11. Enter the total in Line 12b.

Line 13 – Multiply the value of Line 12b by the value of Line 7. Enter the result on Line 13b

Line 14 – Add the value of Line 12a and Line 13b. Enter it on Line 14.

Line 15 – The value of Line 8 minus the value of Line 14. If the result is zero, or a negative number, enter zero.

Line 16 – If the amount of mortgage interest you deduct on Schedule A is limited, enter any of the excess here. If this applies to you, the IRS has more details on their end.

Line 17 – Enter the amount paid for homeowners insurance. Generally this will go in the (b) column.

Line 18 – If you rent as opposed to own your home, enter the amount you pay in rent. Generally this will go in the (b) column. For more info check out the IRS’ guide.

Line 19 – Enter the amount you spent on repairs and maintenance for your home. These can fall into both the (a) or (b) column depending on the nature of the work done. For example, if you had to get the furnace repaired it would be entered in the (b) column but if you got your office repainted that would be entered in the (a) column.

Line 20 – Enter the amount spent on utilities. These can fall into both the (a) and (b) columns depending on the utility. For example, your electricity bill would fall into the (b) column but if your landline phone was only used for business that would land in column (a).

Line 21 – This is where you can include any other business use of home expenses that weren’t covered elsewhere. For example, you could include neighborhood association dues here. For more info check out the IRS’ guide for this section.

Line 22 – Add the totals in the (a) column for Lines 16 through 21. Enter the result in Line 22(a). Add the totals in the (b) column for Lines 16 through 21. Enter the result in Line 22(b).

Line 23 – Multiply the value of Line 22(b) by the value of Line 7. Enter the result on Line 23.

Line 24 – Look at your 2013 version of Form 8829 and enter the value on Line 42 of that form on Line 24 of this form. The IRS has more information.

Line 25 – Add the value of Line 22(a), the value of Line 23 and the value of Line 24. Enter the result on Line 25.

Line 26 – Enter either the value of Line 15 or the value of Line 25 – whichever is smaller.

Line 27 – The value of Line 15 minus the value of Line 26. Enter the result on Line 27.

Line 28 – If you have casualty losses beyond what you entered on Line 9, multiply them by the business percentage of those losses and enter the result on Line 28. The IRS’ guide has more information if you need it.

Line 29 – Jump down to Line 36 to figure out the value for Line 29.

Line 30 – Look at your 2013 version of Form 8829. Enter the value of Line 43 from that form on Line 30 of this form. For more info see the IRS’ website.

Line 31 – Add the values of Line 28, Line 29 and Line 30 together. Enter the result on Line 31.

Line 32 – Enter either the value of Line 27 or Line 31 – whichever is smaller.

Line 33 – Add the values of Line 14, Line 26 and Line 32. Enter the result on Line 33.

Line 34 – Calculate the amount of Lines 14 and 32, that are from casualty loss (if any.) Enter them on Line 34. You’ll also need to include this number on Form 4684, Line 27. For more info check out the IRS’ instructions.

Line 35 – The value of Line 33 minus Line 34. Enter the result on Line 35. You’ll also need to enter this value on your Schedule C, Line 30. The IRS has more info.

PART III – Depreciation of Your Home

Line 36 – Enter either the cost of your home, or it’s fair market value on the date you began using it for your business, whichever value is less. For more information check out the IRS’ website.

Line 37 – Enter the cost of the land your home sits on, or the fair market value of the land on the date you began using it for your business, whichever value is less. Check out the IRS’ guide for more info.

Line 38 – The value of Line 36 minus the value of Line 37. Enter the result on Line 38.

Line 39 – Multiply the value of Line 38 by the value of Line 7. Enter the result on Line 39.

Line 40 – Depending when you first began using your home for your business you’ll have a different percentage to enter into Line 40. Check out this page from the IRS to find your percentage.

Line 41 – If no additions or improvements have been added to your home since you’ve been using it for business, multiply the value of Line 39 by the percentage on Line 40. If your calculator doesn’t allow you to multiply with a percentage sign, take the number in front of the percentage sign on Line 40 and divide it by 100. Then multiply that result by the value of Line 39. If you did add additions or improvements to your home after you began using it for business, check out this guide for how to calculate the value of those additions. Also enter the value of Line 41 on Line 29.

PART IV – Carryover of Unallowed Expenses to 2015

Line 42 – The value of Line 25 minus the value of Line 26. Enter the result on Line 42. If the result was a negative number, enter 0.

Line 43 – The value of Line 31 minus the value of Line 32. Enter the result on Line 43. If the result was a negative number, enter 0.


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