What is IRS Form 8829: Expenses for Business Use of Your Home

Summary

Just because you work at home doesn't mean you can write off all the power and water bills in your house. The IRS has very precise language regarding what expenses are allowed for a home office tax deduction:

However, your deduction is limited to the percentage of your home that is dedicated exclusively to your business. For example, if only 10% of the square footage of your house is reserved exclusively for business use, you can only use 10% of your home expenses as a business deduction.

Any expenses you deduct must be directly related to your business. Typical allowable expenses are similar to those allowed for office-based businesses. Common deductions include:

Just because you work at home doesn't mean you can write off all the power and water bills in your house. The IRS has very precise language regarding what expenses are allowed for a home office tax deduction:

However, your deduction is limited to the percentage of your home that is dedicated exclusively to your business. For example, if only 10% of the square footage of your house is reserved exclusively for business use, you can only use 10% of your home expenses as a business deduction.

Any expenses you deduct must be directly related to your business. Typical allowable expenses are similar to those allowed for office-based businesses. Common deductions include:

Audit Risks and deduction limitations

The home office tax deduction is easy to claim but can be hard to defend. Many working Americans, even those who do legitimately work at home, do not have a specific, exclusive area that is used solely for business. For example, one taxpayer claimed a hallway and bathroom as part of his home office but had this deduction denied since his children occasionally used the bathroom.

Another thing to note is that certain expenses can only be used to the extent of your business income. If you earn $100,000 from an office job but lose money at your home-based business, you can only deduct certain home office expenses.

TurboTax Self-Employed will ask you simple questions about your life and help you fill out all the right forms. Perfect for independent contractors and small businesses. We’ll search over 500 tax deductions to get you every dollar you deserve and help you uncover industry-specific deductions.

What is IRS Form 8829: Expenses for Business Use of Your Home
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