Use Form 8829 to figure the allowable expenses for business use of your home on Schedule C (Form 1040) and any carryover to 2015 of amounts not deductible in 2014.
You must meet specific requirements to deduct expenses for the business use of your home. Even if you meet these requirements, your deductible expenses may be limited. Part IV is used to figure any allowable carryover of expenses that are more than the limit. For details, see Pub. 587, Business Use of Your Home (Including Use by Daycare Providers).
Who cannot use Form 8829. Do not use Form 8829 in the following situations.
- You are claiming expenses for business use of your home as an employee or a partner, or you are claiming these expenses on Schedule F (Form 1040). Instead, complete the worksheet in Pub. 587.
- All of the expenses for business use of your home are properly allocable to inventory costs. Instead, figure these expenses in Schedule C, Part III.
- You have elected to use the simplified method for this home for 2014. If you had more than one home during the year that you used for business, you can use the simplified method for only one home. Use Form 8829 to claim expenses for business use of the other home. For more information about the simplified method, see the Instructions for Schedule C and Pub. 587.
Who Can Deduct Expenses for Business Use of a Home
Generally, you can deduct business expenses that apply to a part of your home only if that part is exclusively used on a regular basis:
- As your principal place of business for any of your trades or businesses,
- As a place of business used by your patients, clients, or customers to meet or deal with you in the normal course of your trade or business, or
- In connection with your trade or business if it is a separate structure that is not attached to your home.
As explained later, exceptions to this rule apply to space used on a regular basis for:
- Storage of inventory or product samples, and
- Certain daycare facilities.
Principal Place of Business
In determining whether the office in your home qualifies as your principal place of business, you must consider the following two items.
- The relative importance of the activities performed at each place where you conduct business, and
- The amount of time spent at each place where you conduct business.
Your home office will qualify as your principal place of business if you meet the following requirements.
You use it exclusively and regularly for administrative or management activities of your trade or business.
You have no other fixed location where you conduct substantial administrative or management activities of your trade or business.
Administrative or management activities. There are many activities that are administrative or managerial in nature. The following are a few examples.
- Billing customers, clients, or patients.
- Keeping books and records.
- Ordering supplies.
- Setting up appointments.
- Forwarding orders or writing reports.
Administrative or management activities performed at other locations. The following activities performed by you or others will not disqualify your home office from being your principal place of business.
You have others conduct your administrative or management activities at locations other than your home. (For example, another company does your billing from its place of business.)
- You conduct administrative or management activities at places that are not fixed locations of your business, such as in a car or a hotel room.
- You occasionally conduct minimal administrative or management activities at a fixed location outside your home.
- You conduct substantial nonadministrative or nonmanagement business activities at a fixed location outside your home. (For example, you meet with or provide services to customers, clients, or patients at a fixed location of the business outside your home.)
- You have suitable space to conduct administrative or management activities outside your home, but choose to use your home office for those activities instead.
More information. For information on other ways to qualify to deduct business use of the home expenses, see Pub. 587.
Storage of Inventory or Product Samples
You can also deduct expenses that apply to space within your home used on a regular basis to store inventory or product samples from your trade or business of selling products at retail or wholesale. Your home must be the only fixed location of your trade or business.
If you use space in your home on a regular basis in the trade or business of providing daycare, you may be able to deduct the
business expenses even though you use the same space for nonbusiness purposes. To qualify for this exception, you must have applied for (and not have been rejected), been granted (and still have in effect), or be exempt from having a license, certification, registration, or approval as a daycare center or as a family or group daycare home under state law.
Expenses Related to TaxExempt Income
Generally, you cannot deduct expenses that are allocable to tax-exempt income. However, if you receive a tax-exempt parsonage allowance or a tax-exempt military housing allowance, your expenses for mortgage interest and real property taxes are deductible under the normal rules. No deduction is allowed for other expenses allocable to the tax-exempt allowance.