Form 8829 is used to claim the home office deduction by calculating the business-related portion of home expenses. Self-employed individuals and freelancers can deduct costs such as rent, utilities and depreciation if they use a designated space exclusively for work. However, the IRS sets specific guidelines for eligibility, including regular and exclusive business use of the home office. By completing Form 8829, qualifying taxpayers can reduce their taxable income based on the percentage of their home dedicated to business activities.
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The home office deduction enables eligible taxpayers to write off a portion of their household expenses if they use part of their home exclusively for business. This deduction applies to self-employed individuals, independent contractors and freelancers.
Regular employees can’t claim this deduction. And Form 8829 can’t be used by partners or other business owners who claim these deductions elsewhere on their returns.
Some of the activities that qualify for business use include:
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Serving as the principal place of business for your trade or occupation
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Meeting with clients, customers or patients
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Storing inventory or samples
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Providing some types of daycare
Home-based office users can write off both direct expenses, such as repairs made specifically to the office space, and indirect expenses, including a percentage of rent, mortgage interest, utilities and property taxes. There are two ways to calculate the deduction:
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Simplified method: This provides a standard rate per square foot of office space and does not require filing Form 8829.
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Actual expense method: This requires detailed records of costs.
Claiming a deduction for a home office may increase the chances of an IRS audit. It’s important to have proper documentation supporting how the space is used and, if using the actual expense method, detailing costs.
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Form 8829 is used by self-employed individuals who operate a business from home and want to deduct a portion of their household expenses. This form is filed alongside Schedule C (Profit or Loss from Business) and helps determine the portion of rent, utilities, mortgage interest, property taxes and other eligible costs that can be deducted.
Employees generally cannot use Form 8829 due to tax law changes under the Tax Cuts and Jobs Act.
