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Department of the Treasury

Internal Revenue Service

Instructions for Form 8829


Expenses for Business Use of Your Home
Paperwork Reduction Act deal with you in the normal course of your family or group day-care home under state
trade or business; or law.
Notice 3. In connection with your trade or
We ask for the information on this form to business if it is a separate structure that is Specific Instructions
carry out the Internal Revenue laws of the not attached to your home.
United States. You are required to give us Part I
In determining whether a business
the information. We need it to ensure that location in your home qualifies as your Lines 1 and 2.—To determine the area on
you are complying with these laws and to principal place of business, you must lines 1 and 2, you may use square feet or
allow us to figure and collect the right consider the following two factors: any other reasonable method if it
amount of tax. accurately figures your business
1. The relative importance of the
The time needed to complete and file activities performed at each business percentage on line 7.
this form will vary depending on individual location; and Do not include on line 1 the area of your
circumstances. The estimated average time home you used to figure any expenses
is: Recordkeeping, 52 min.; Learning 2. The amount of time spent at each
location. allocable to inventory costs. The business
about the law or the form, 7 min.; percentage of these expenses should have
Preparing the form, 1 hr., 13 min.; and A comparison of the relative importance been taken into account in Part III of
Copying, assembling, and sending the of the activities performed at each Schedule C.
form to the IRS, 20 min. business location depends on the
characteristics of each business. If the Special computation for certain day-care
If you have comments concerning the facilities.—If the part of your home used
accuracy of these time estimates or nature of your business requires that you
meet or confer with clients or patients, or as a day-care facility included areas used
suggestions for making this form more exclusively for business as well as other
simple, we would be happy to hear from that you deliver goods or services to a
customer, the place where that contact areas used only partly for business, you
you. You can write to both the IRS and the cannot figure your business percentage
Office of Management and Budget at the occurs must be given a greater weight in
determining where the most important using Part I. Instead, follow these three
addresses listed in the instructions for steps:
Form 1040. activities are performed. Performance of
necessary or essential activities at the 1. Figure the business percentage of the
business location in your home (such as part of your home used exclusively for
General Instructions planning for services or the delivery of business by dividing the area used
goods, or the accounting or billing for exclusively for business by the total area of
Purpose of Form those activities or goods) is not controlling. the home.
Use Form 8829 to figure the allowable In addition to comparing the relative 2. Figure the business percentage of the
expenses for business use of your home importance of the activities performed at part of your home used only partly for
on Schedule C (Form 1040) and any each business location, you should also business by following the same method
carryover to 1994 of amounts not compare the amount of time spent on used in Part I of the form, but enter on line
deductible in 1993. business at each location. The time 1 of your computation only the area of the
If all of the expenses for business use of consideration is particularly significant home used partly for business.
your home are properly allocable to when a comparison of the importance of 3. Add the business percentages you
inventory costs, do not complete Form the activities performed at each business figured in the first two steps and enter the
8829. These expenses are figured in Part location does not clearly identify the result on line 7. Attach your computation
III of Schedule C and not on Form 8829. location of your principal place of and write “See attached computation”
You must meet specific requirements to business. This may happen when you directly above the percentage you entered
deduct expenses for the business use of perform income-producing activities at on line 7.
your home. Even if you meet these both your home and some other location.
Line 4.—Enter the total number of hours
requirements, your deductible expenses Exception for storage of inventory.— the facility was used for day care during
are limited. For details, get Pub. 587, You may also deduct expenses that apply the year.
Business Use of Your Home. to space within your home if it is the only
fixed location of your trade or business. Example. Your home is used Monday
Note: If you file Schedule F (Form 1040) or through Friday for 12 hours per day for 250
you are an employee or a partner, do not The space must be used on a regular basis
to store inventory from your trade or days during the year. It is also used on 50
use this form. Instead, use the worksheet Saturdays for 8 hours per day. Enter 3,400
in Pub. 587. business of selling products at retail or
wholesale. hours on line 4 (3,000 hours for weekdays
plus 400 hours for Saturdays).
Who May Deduct Expenses for Exception for day-care facilities.—If you
use space in your home on a regular basis Line 5.—If you started or stopped using
Business Use of a Home your home for day care in 1993, you must
in the trade or business of providing day
Generally, you may deduct business care, you may be able to deduct the prorate the number of hours based on the
expenses that apply to a part of your home business expenses even though you use number of days the home was available for
only if that part is exclusively used on a the same space for nonbusiness purposes. day care. Cross out the preprinted entry on
regular basis: To qualify for this exception, you must line 5. Multiply 24 hours by the number of
1. As your principal place of business for have applied for (and not have been days available and enter the result.
any of your trades or businesses; or rejected), been granted (and still have in Part II
2. As a place of business used by your effect), or be exempt from having a
patients, clients, or customers to meet or license, certification, registration, or Line 8.—If all of the gross income from
approval as a day-care center or as a your trade or business is from the business

Cat. No. 15683B


use of your home, enter on line 8 the to enter on line 9 by completing Form improvements placed in service after you
amount from Schedule C, line 29, plus any 4684, Section A. When figuring line 17, began to use your home for business. Do
net gain or (loss) derived from the business enter 10% of your adjusted gross income not include any amounts on lines 35
use of your home and shown on Schedule excluding the gross income from business through 38 for these expenditures. Instead,
D or Form 4797. If you file more than one use of your home and the deductions see the instructions for line 40.
Form 8829, include only the income earned attributable to that income. Include on line Line 39.—If you first used your home for
and the deductions attributable to that 9 of Form 8829 the amount from Form business in 1993, enter the percentage for
income during the period you owned the 4684, line 18. See line 27 to deduct part of the month you first used it for business.
home for which Part I was completed. the casualty losses not allowed because of
If part of the income is from a place of the limits on Form 4684. Jan. 3.042% May 1–12 1.984% *Sept. 0.749%
Feb. 2.778% *May 13–31 1.605% *Oct. 0.535%
business other than your home, you must Do not file or use that Form 4684 to
March 2.513% *June 1.391% *Nov. 0.321%
first determine the part of your gross figure the amount of casualty losses to April 2.249% *July 1.177% *Dec. 0.107%
income (Schedule C, line 7, and gains from deduct on Schedule A. Instead, complete a *Aug. 0.963%
Schedule D and Form 4797) from the separate Form 4684 to deduct the
business use of your home. In making this personal portion of your casualty losses. *If you started construction before May 13, 1993, on
determination, consider the amount of time a home used for business, or you had a binding written
On line 10, include only mortgage contract to buy or build it before that date, a larger
you spend at each location as well as interest that would be deductible on percentage applies. Get Pub. 534, Depreciation, for the
other facts. After determining the part of Schedule A and that qualifies as a direct or percentage to enter on line 39.
your gross income from the business use indirect expense. Do not include interest
of your home, subtract from that amount If you first used your home for business
on a mortgage loan that did not benefit before 1993 and after 1986, enter 3.175%.
the total expenses shown on Schedule C, your home (e.g., a home equity loan used
line 28, plus any losses from your business If the business use began before 1987 or
to pay off credit card bills, to buy a car, or you stopped using your home for business
shown on Schedule D or Form 4797. Enter to pay tuition costs).
the result on line 8 of Form 8829. before the end of the year, see Pub. 534
If you itemized your deductions, be sure for the percentage to enter.
Columns (a) and (b).—Enter as direct or to claim only the personal portion of your
indirect expenses only expenses for the Line 40.—If no additions and
deductible mortgage interest and real improvements were placed in service after
business use of your home (i.e., expenses estate taxes on Schedule A. For example,
allowable only because your home is used you began using your home for business,
if your business percentage on line 7 is multiply line 38 by the percentage on line
for business). Other expenses not allocable 30%, you can claim 70% of your
to the business use of your home such as 39. Enter the result on lines 40 and 28.
deductible mortgage interest and real
salaries, supplies, and business telephone estate taxes on Schedule A. If additions and improvements were
expenses, are deductible elsewhere on placed in service during 1993 (but after
Schedule C and should not be entered on Line 16.—If the amount of home mortgage you began using your home for business),
Form 8829. interest you deduct on Schedule A is figure the amount of depreciation allowed
limited, enter the part of the excess on these expenditures by multiplying the
Direct expenses benefit only the mortgage interest that qualifies as a direct
business part of your home. They include business part of their cost or other basis
or indirect expense. Do not include by the percentage shown in the line 39
painting or repairs made to the specific mortgage interest on a loan that did not
area or room used for business. Enter instructions for the month placed in
benefit your home (explained above). service. If additions and improvements
100% of your direct expenses on the
appropriate expense line in Line 20.—If you rent rather than own your were placed in service before 1993 and
column (a). home, include the rent you paid on line 20, after 1986 (but after you began using your
column (b). home for business), figure the depreciation
Indirect expenses are for keeping up by multiplying the business part of their
and running your entire home. They benefit Line 27.—Multiply your casualty losses in
excess of the amount on line 9 by the cost or other basis by 3.175%. If additions
both the business and personal parts of and improvements were placed in service
your home. Generally, enter 100% of your business percentage of those losses and
enter the result. before 1987 (but after you began using
indirect expenses on the appropriate your home for business) or you stopped
expense line in column (b). Line 34.—If your home was used in more using your home for business before the
Exception. If the business percentage of than one business, allocate the amount end of the year, see Pub. 534 to figure the
an indirect expense is different from the shown on line 34 to each business using depreciation.
percentage on line 7, enter only the any method that is reasonable under the
circumstances. For each business, enter Attach a schedule showing your
business part of the expense on the computation and include the amount you
appropriate line in column (a), and leave on Schedule C, line 30, only the amount
allocated to that business. figured in the total for line 40. Write “see
that line in column (b) blank. For example, attached” below the entry space.
your electric bill is $800 for lighting, Part III
cooking, laundry, and television. If you Complete and attach Form 4562,
reasonably estimate $300 of your electric Lines 35 through 37.—Enter on line 35 the Depreciation and Amortization, only if:
bill is for lighting and you use 10% of your cost or other basis of your home, or if less, 1. You first used your home for business
home for business, enter $30 on line 19 in the fair market value of your home on the in 1993, or
column (a). Do not make an entry on line date you first used the home for business. 2. You are depreciating additions and
19 in column (b) for any part of your Do not adjust this amount for depreciation improvements placed in service in 1993.
electric bill. claimed or changes in fair market value
after the year you first used your home for If you first used your home for business
Lines 9, 10, and 11.—Enter only the in 1993, enter on Form 4562, in column (c)
business. Allocate this amount between
amounts that would be deductible whether of line 14h, the amount from line 38 of
land and building values on lines 36 and
or not you used your home for business Form 8829. Then enter on Form 4562, in
37.
(i.e., amounts allowable as itemized column (g) of line 14h, the amount from
deductions on Schedule A (Form 1040)). Show on an attached schedule the cost line 40 of Form 8829 (but do not include it
or other basis of additions and on Schedule C, line 13).
Treat casualty losses as personal
expenses for this step. Figure the amount

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