Publication 587 - Business Use Of Your Home - 2002 (Page 18 of 27) in pdf

Expense

Amount

Schedule A

Casualty losses. Enter the business part of casualty

losses (line 31 of the worksheet) on line 27 of Form 4684,

Deductible mortgage interest

$1,500

Line 10 or 11*

Section B. Write “See attached statement” above line 27.

Real estate taxes

$1,000

Line 6*

Other expenses. If you file Form 2106 or Form 2106 –EZ,

Expenses not related to the

business use of the home

$2,000

Line 20**

report on line 4 the following expenses.

Otherwise nondeductible expenses

$800

Line 20**

•

The business part of your otherwise nondeductible

Depreciation

$700

Line 20**

expenses (utilities, maintenance, insurance, depreci-

ation, etc.) that do not exceed the deduction limit.

*In addition to the 80% nonbusiness part of the expense.

**Subject to the 2%-of-adjusted-gross-income limit.

•

The employee business expenses not related to the

You can carry over the $900 of depreciation that ex-

use of your home, such as advertising.

ceeds the deduction limit to next year, subject to the

Add these to your other employee business expenses and

deduction limit for that year.

complete the rest of the form. Enter the total from Form

2106, or Form 2106 – EZ, on line 20 of Schedule A, where it

Partners

is subject to the 2%-of-adjusted-gross-income limit. If you

do not have to file Form 2106 or Form 2106 –EZ, enter

You may be allowed to deduct unreimbursed ordinary and

your total expenses directly on line 20 of Schedule A.

necessary expenses you paid on behalf of the partnership

(including qualified expenses for the business use of your

Example. You are an employee who works at home for

home) if you were required to pay these expenses under

the convenience of your employer. You meet all the re-

the partnership agreement.

quirements to deduct expenses for the business use of

Use the worksheet near the back of this publication to

your home. Your employer does not reimburse you for any

figure the deduction for the business use of your home.

of your business expenses and you are not otherwise

required to file Form 2106 or Form 2106 – EZ.

Deducting unreimbursed partnership expenses. See

As an employee, you do not have gross receipts, cost of

the following forms and related instructions for information

goods sold, etc. You begin with gross income from the

about deducting unreimbursed partnership expenses.

business use of your home, which you determine to be

•

Schedule E, Supplemental Income and Loss.

$6,000.

•

The percentage of expenses due to the business use of

Schedule SE, Self-Employment Tax.

your home is 20%. You have the following expenses.

•

Schedule K –1, Partner’s Share of Income, Credits,

Deductions, etc.

Deductible mortgage interest (20%) . . . . . . . . . . . . . . . . .

$1,500

Real estate taxes (20%) . . . . . . . . . . . . . . . . . . . . . . . . .

1,000

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$2,500

More information. For more information about partners

Expenses not related to business use of the home (100%):

and partnerships, get Publication 541, Partnerships.

Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$500

Advertising . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,300

Telephone . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

200

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$2,000

Schedule C Example

Otherwise nondeductible expenses:

Maintenance (20%) . . . . . . . . . . . . . . . . . . . . . . . . . . .

$200

The filled-in forms for John Stephens that follow show how

Utilities (20%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

350

Insurance (20%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

250

to report deductions for the business use of your home if

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$800

you file Schedule C (Form 1040).

Depreciation (20%) . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,600

Form 4562. The following line references apply to Form

4562.

Based on the above expenses, you figure your deduc-

tion limit as follows.

Part I, lines 1 –13. John began using his home for

business in January of this year. He purchased a new

Gross income . . . . . . . . . . . . . . . . . . . . . . . . .

$6,000

computer and filing cabinet to use in his business. The

Less:

Deductible mortgage interest (20%) . . . . . . . . .

$1,500

computer, used 100% for business, cost $3,200. The filing

Real estate taxes (20%) . . . . . . . . . . . . . . . . .

1,000

cabinet cost $600. He elects to take the section 179 deduc-

Expenses not related to business use of the home

tion for both items.

(100%) . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,000

4,500

John completes Part I of Form 4562. He enters the cost

Deduction limit . . . . . . . . . . . . . . . . . . . . . . .

$1,500

of both the computer and filing cabinet, $3,800, on line 2

Your deduction for otherwise nondeductible expenses and

and completes lines 4 and 5. On line 6, he enters a

depreciation is limited to $1,500. You can deduct all your

description of each item, its cost and the cost he elects to

otherwise nondeductible expenses ($800) and $700

expense. He completes the remaining lines in Part I.

($1,500 − $800) of your depreciation.

You deduct your expenses for business use of your

Part III, line 19c. John converted to business use a

home on Schedule A (Form 1040) as shown in the follow-

desk and chair (furniture) he had purchased in 1996 for

ing table.

personal purposes. In 1996, he paid $1,500 for them. The

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Publication 587 - Business Use Of Your Home - 2002 Page 18

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