Form 8829 2022 Printable, Fillable PDF – One of the numerous advantages of working from home is the ability to deduct genuine business costs from your income tax. Because home office tax deductions are so readily misused, the Internal Revenue Service (IRS) prefers to investigate them more thoroughly than other portions of your tax return, which is a disadvantage. But if you are able to verify your home office expenses, you shouldn’t be scared to claim them on your tax return. IRS Form 8829 assists you in determining what you are eligible to claim and what you are not.
Because you work from home, you cannot deduct all of your electricity and water expenses from your taxes.Regarding what costs are allowable for a home office tax deduction, the Internal Revenue Service is quite specific:
- First and foremost, the space in your house where you do business must serve as your primary place of business.
- Following that, you may only deduct costs for those areas of your house that are primarily utilized for business purposes (as opposed to personal usage).
- You cannot, for example, work in your kitchen for four hours and then claim a deduction for your new refrigerator.
- You must have a designated space that you use exclusively for business purposes, and only costs incurred in that space may be reported on Form 8829.
Legally Required Company Expenditures
Any costs that you claim as a tax deduction must be directly tied to your company’s operations. The typical authorized costs for home-based enterprises are comparable to those that are allowed for office-based organizations. The following are examples of common deductions:
- Repairs and upkeep are required.
- Depreciation on a house
- mortgage interest that is tax deductible.
Your deduction, on the other hand, is restricted to the portion of your house that is entirely allocated to your company. Example: If just 10% of the square footage of your home is dedicated completely to business usage, you may only deduct 10% of your home’s costs as a business expense on your federal tax return.
Making Use Of IRS Form 8829
- Part I of Form 8829 asks you to determine the portion of your house that is utilized for commercial purposes. For the majority of enterprises, you simply divide the entire square footage of your home by the total square footage of the space dedicated to your company. Further modifications will be required if you operate a childcare service out of your home in a space that is not solely utilized for the operation of the company.
- Part II consists of a list of your overall company revenue as well as your deductible business costs. If you follow the directions on the form, you will be able to calculate the total permissible cost for the commercial use of your house.
- Part III: This section consists of six lines on which you will calculate the depreciation of your house during its lifetime. Determine your authorized depreciation percentage by consulting the form’s instructions. You may find them on page 2 of the form.
- In the fourth and final portion, you must assess if any disallowed cost amounts may be carried over to the next tax year in this last section.