Instructions For Form 8829 - Expenses For Business Use Of Your Home

Part II

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

Line 8

(and still have in effect), or be exempt from having a license,

If all the gross income from your trade or business is from the

certification, registration, or approval as a daycare center or as a

business use of your home, enter on line 8 the amount from

family or group daycare home under state law.

Schedule(s) C, line 29, plus any gain derived from the business

Expenses Related to TaxExempt Income

use of your home and shown on Form 8949 (and included on

Schedule D (Form 1040)) or Form 4797, minus any loss shown

Generally, you cannot deduct expenses that are allocable to

on Form 8949 (and included in Schedule D) or Form 4797 that is

tax-exempt income. However, if you receive a tax-exempt

allocable to the trade or business in which you use your home

parsonage allowance or a tax-exempt military housing

but is not allocable to the use of the home. If you file more than

allowance, your expenses for mortgage interest and real

one Form 8829, include only the income earned and the

property taxes are deductible under the normal rules. No

deductions attributable to that income during the period you

deduction is allowed for other expenses allocable to the

owned the home for which Part I was completed.

tax-exempt allowance.

If some of the income is from a place of business other than

your home, you must first determine the part of your gross

Specific Instructions

income (Schedule C, line 7, and gains from Form 8949,

Schedule D, and Form 4797) from the business use of your

Part I

home. In making this determination, consider the amount of time

you spend at each location as well as other facts. After

Lines 1 and 2

determining the part of your gross income from the business use

of your home, subtract from that amount the total expenses

To determine the area on lines 1 and 2, you can use square feet

shown on Schedule C, line 28, plus any losses shown on Form

or any other reasonable method if it accurately figures your

8949 (and included in Schedule D) or Form 4797 that are

business percentage on line 7.

allocable to the trade or business in which you use your home

Do not include on line 1 the area of your home you used to

but that are not allocable to the use of the home. Enter the result

figure any expenses allocable to inventory costs. The business

on Form 8829, line 8.

percentage of these expenses should have been taken into

account in Schedule C, Part III.

Columns (a) and (b)

Enter as direct or indirect expenses only expenses for the

Special Computation for Certain Daycare Facilities

business use of your home (that is, expenses allowable only

If the part of your home used as a daycare facility includes areas

because your home is used for business). If you did not operate

used exclusively for business as well as other areas used only

a business for the entire year, you can deduct only the expenses

partly for business, you cannot figure your business percentage

paid or incurred for the portion of the year you used your home

using Part I. Instead, follow these three steps:

for business. Other expenses not allocable to the business use

of your home, such as salaries, supplies, and advertising, are

1. Figure the business percentage of the part of your home

deductible elsewhere on Schedule C and should not be entered

used exclusively for business by dividing the area used

on Form 8829.

exclusively for business by the total area of the home.

2. Figure the business percentage of the part of your home

Direct expenses benefit only the business part of your home.

used only partly for business by following the same method used

They include painting or repairs made to the specific area or

in Part I of the form, but enter on line 1 of your computation only

rooms used for business. Enter 100% of your direct expenses on

the area of the home used partly for business.

the appropriate line in column (a).

3. Add the business percentages you figured in the first two

Indirect expenses are for keeping up and running your entire

steps and enter the result on line 7. Attach a statement with your

home. They benefit both the business and personal parts of your

computation and enter “See attached computation” directly

home. Generally, enter 100% of your indirect expenses on the

above the percentage you entered on line 7.

appropriate line in column (b).

Exception. If the business percentage of an indirect expense

Line 4

is different from the percentage on line 7, enter only the business

Enter the total number of hours the facility was used for daycare

part of the expense on the appropriate line in column (a), and

during the year.

leave that line in column (b) blank. For example, your electric bill

is $800 for lighting, cooking, laundry, and television. If you

Example. Your home is used Monday through Friday for 12

reasonably estimate $300 of your electric bill is for lighting and

hours per day for 250 days during the year. It is also used on 50

you use 10% of your home for business, enter $30 on line 20 in

Saturdays for 8 hours per day. Enter 3,400 hours on line 4

column (a). Do not make an entry on line 20 in column (b) for any

(3,000 hours for weekdays plus 400 hours for Saturdays).

part of your electric bill.

Line 5

Lines 9, 10, and 11

If you started or stopped using your home for daycare in 2014,

Enter only the amounts that would be deductible whether or not

you must prorate the number of hours based on the number of

you used your home for business (that is, amounts allowable as

days the home was available for daycare. Cross out the

itemized deductions on Schedule A (Form 1040)).

preprinted entry on line 5. Multiply 24 hours by the number of

days available and enter the result.

Treat casualty losses as personal expenses for this step.

Figure the amount to enter on line 9 by completing Form 4684,

Section A. If you are filing Schedule A, enter 10% of your

adjusted gross income excluding the gross income from

business use of your home and the deductions attributable to

that income when figuring the amount to enter on Form 4684,

Instructions For Form 8829 - Expenses For Business Use Of Your Home - 2014 Page 2

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