Form 8829
Form 8829: Expenses for Business Use of Your Home
The federal form used to compute the home office deduction by allocating actual home expenses to the business-use percentage of the home.
Who Files Form 8829
Self-employed taxpayers (Schedule C filers, partners using the home for partnership business, statutory employees) who use part of their home regularly and exclusively for business as the principal place of business. W-2 employees cannot claim a home office deduction under current law.
What Form 8829 Reports
Form 8829 calculates the actual-expense method: business-use percentage of mortgage interest, property tax, utilities, insurance, repairs, and depreciation, plus directly allocable expenses. Alternatively, the simplified method (claimed directly on Schedule C without Form 8829) deducts $5 per square foot up to 300 square feet ($1,500 maximum). Carryover provisions apply when the deduction exceeds gross income from the home-business use.
Key Deadlines
- Filed with the annual Form 1040 by April 15 (or October 15 with extension)
Common Mistakes
- Failing the regular and exclusive use test (using the space for any personal purpose disqualifies it)
- Claiming the home office deduction as a W-2 employee (not allowed under TCJA)
- Forgetting depreciation recapture on sale of the home for years the home office was claimed
- Mixing simplified method one year and actual method the next without recomputing depreciation
Best Practices
- Document the regular and exclusive use of the home office. Photos with date stamps, a measured floor plan, and a separate phone line strengthen the audit position.
- Compare the simplified method ($5/sq ft, max 300 sq ft, $1500 cap) to the actual method each year. For larger spaces or higher home costs, actual usually wins by a wide margin.
- Plan for depreciation recapture on home sale. Section 121 exclusion does not cover depreciation claimed; that portion is taxed at up to 25 percent on sale.
- For partial-year home office use, prorate the deduction by months. A mid-year start or end is documented through utility-bill statements.
- Keep records for at least 7 years after sale of the home. The depreciation recapture is computed against years of business use.
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Related Tax Terms
Home Office Deduction
A deduction for the business-use portion of a home, available to self-employed taxpayers who use part of their home regularly and exclusively for business.
Schedule C (Profit or Loss from Business)
The federal tax form filed with Form 1040 to report income and expenses of a sole proprietorship or single-member LLC treated as a disregarded entity.
Self-Employment Tax
The Social Security and Medicare tax (15.3% combined) paid by self-employed taxpayers on their net earnings from self-employment.
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