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WORKING FROM YOUR HOME OFFICE:

What to Know About Form 8829

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Do you work from home?

Is your office culture solely dependent on the mood you wake up in? Is your daily commute the steps you take from the bed to the desk? Before you go into meetings, do you prepare by putting on a shirt? You can probably see where this is going. Working from home is nothing new. We've had the technology for virtual meetings for over a decade, and internet service is more widely available and affordable than ever before. Most people expect every coffee shop and hotel, even in smaller towns, to offer wifi these days.
form-8829
The big change is that it seems to have taken a global pandemic for the world to realize that working from home is not synonymous with laziness. In fact, several studies during the pandemic showed that remote workers are actually more productive. And it makes sense, working from home is all about having control over how you spend your time. It's a freedom that we all desire as human beings. And it translates to self-employment and freelancing. Having the freedom to run your own business from home is one of the great perks of being a small business owner or a freelancer. Among the many pleasures of running your business from your home is the fact that things like office supplies, internet service and even a portion of your utilities can be tax write-offs. The federal government knows that having more people starting more businesses is great for the economy. It creates more economic opportunities for more people. So, to encourage us all to be enterprising 'murricans, the government makes it easier for us to pay for the things we need to run our businesses. The flip side is the IRS also needs a way to report the expenses that we write off our taxes. That's where tax form 8829, the home office deduction form comes in.

Table of contents

Great, can we get to the point?...Read more

And who is the IRS form 8829 for?...Read more

What qualifies a space in your home to be a home office?...Read more

Where can I find form 8829 instructions?...Read more

What will you need to fill out the tax form for home office deductions?...Read more

How to calculate home office deduction...Read more

Two kinds of home business space expenses...Read more

How do I calculate each indirect expense?...Read more

Great, can we get to the point?

The Form 8829 is the tax form that's just for the business use of home office expenses lists the numerous categories of business expenses that the IRS allows us to deduct from our taxes. All you have to know is what fits into those categories.
How to know what you can deduct from your home office expenses
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IRS form 8829 is also one of the most valuable tax forms for freelancers, because it is your opportunity to tell the federal government how much you spent on your home office and how much you can write off from your taxes because of it. If you're self-employed, and part of the work you do for your business takes place in your home, you can write off a portion of the things you pay for in order to do that work. Federal form 8829 is where you report that stuff as part of the Form 1040 that every taxpaying citizen has to file each year. This tax calculator is a quick and easy tool for finding out what you are likely to owe in taxes overall.

And who is the IRS form 8829 for?

Anyone who's self-employed or works as a freelancer can take advantage of business home office tax deductions. If you own your own business, or if you call yourself a sole proprietor, that's you. If you're an online seller, and you work from home, that's you, too. Are you a writer, a designer, a personal assistant or a business consultant, and you do that work from your home office? You're going to want to deduct the cost of everything you buy that makes you able to do that work. From a portion of your internet service down to every last paperclip, use these deductions to pay less in taxes, because you can!
And who is the <span style="background: linear-gradient(101.76deg, #19ACA4 1.98%, #3563CD 100.59%);
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Even if you only use your home office to do the work of advertising your business or the services you provide, you can deduct those expenses from your taxes. Online education is a way of life for so many more teachers and students for the same pandemic-driven reasons freelance work is. If you're taking professional development courses online, keep in mind that they qualify as a tax write-off, too. Maybe you store inventory for your business. The expenses for you to do that at your home can qualify as a tax write-off. You just need the right Form 8829 instructions, and we'll get to that in a minute.

What qualifies a space in your home to be a home office?

Before you can start calculating percentages that you can deduct from your taxes, just make sure the area you're using for your business fits the IRS criteria for a business-related expense. And here they are:
  • The area needs to be one that you use regularly for your business. We all know what that means, but here's how the IRS defines it: space that you use frequently and routinely for your business daily, weekly or monthly
  • You have to use the space exclusively for business purposes. That means your kitchen or your bedroom can't double as your home office.

Quick tip

Something self-employed people and freelancers overlook all the time is the special consideration they get if they use their space at home to store inventory, or if they use a space at home for some administrative activities to manage their business.

Where can I find form 8829 instructions?

Where can I find form <span style="background: linear-gradient(101.76deg, #19ACA4 1.98%, #3563CD 100.59%);
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IRS Form 8829 instructions are all over the internet, but as always the best place to find them is on the IRS' own website. This means there isn't anything we can tell you that you can't find somewhere else. What we can do is explain it in clearer and simpler terms. Below you'll find tips on how to use Form 8829 to get the most out of the expenses related to the business use of home office space. When the time comes to fill out your home office tax deduction form, you'll be ready.

What will you need to fill out the tax form for home office deductions?

You'll need to do a bit of work and follow some simple instructions for Form 8829 to get everything you need to fill out the home office tax form. But fear not, every minute you spend calculating your business expenses and the home office deduction is going to pay off in savings when you file your taxes. Here's a heads-up on the important numbers you'll be asked to fill out on tax form 8829.
  • Insurance
  • Rent
  • Repairs and maintenance
  • Business use of home utilities
  • Mortgage interest
  • Real estate taxes
  • Your home's fair market value
  • Depreciation of your home

How to calculate home office deduction

How to calculate <span style="background: linear-gradient(101.76deg, #19ACA4 1.98%, #3563CD 100.59%);
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The biggest factor in the size of your home office deduction will always be the amount of space you use for your business. Everything depends on that percentage, and it's the one IRS agents pay the most attention to on your Form 8829, so it's vital to get it right.
How to calculate <span style="background: linear-gradient(101.76deg, #19ACA4 1.98%, #3563CD 100.59%);
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Example If your apartment is 900 square feet, and your home office is 50 square feet, you would divide 50 by 900 to get .06. Multipy that by 100 to get 6%. That's the percentage of your home you use for business purposes.

Two kinds of home business space expenses

Deductions that self-employed taxpayers and freelance workers typically make from their taxes fall into two categories on Form 8829.
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Direct expenses These are home expenses that aree only for your work and have a direct positive effect on your business. They are 100% deductible from your taxes. Indirect expenses These are the expenses that you have for your entire home, including the area that you use for your business. They are deductible from your taxes based on how much of your home you use for your business, so the numbers are all percentages. Note: Interestingly, lawn services are not considered by the IRS to be a deductible business expense, even if your home office is the place where you usually meet clients. But snow removal? That's deductible.

How do I calculate each indirect expense?

For indirect expenses, all you need to do is multiply them by the percentage of business use you have calculated for your entire home or apartment on Form 8829. For example, Katherine is a hairstylist who services clients in her home studio which she calculated to be 6% of the total square footage of her home. Katherine has a $350 electric bill, which she can multiply by .06 (6%) to get her deduction. For the bright lights and hair drying equipment she has in her home studio, Karen can deduct $21 of her electric bill from her taxes.

Form 1099-MISC VS Form 1099-NEC

Understand what makes these 1099 forms different from each other and what they mean for you as a 1099 freelancer, independent contractor or self-employed individual.

Form 1040-ES

This vital tax form for self-employed individuals and freelancers is how they pay quarterly taxes, which they need to estimate (ES means estimated taxes).

Form 1040

This is the most common document in the US tax system. It's the master tax return that every American fills out.

Form 1040 Schedule C

Running a business by yourself? This is the tax return 2022 schedule where you report how much (knock on wood) profit you made or how much you (heaven forbid) lost over the course of the year.

Form 1040 Schedule SE

SE stands for self-employment tax, and this is where people who make a living working for themselves or freelancing pay Social Security and Medicare taxes.

Form 1099

If you're self-employed, this is the form that the people who pay you use to report those payments to the IRS. Here's what you need to know about it.

Losing a 1099 form

If you've lost a 1099 that was sent to you, fear not. Here's what you can do if it happens.

Form 1099-NEC

Entities that pay you for services as a freelancer or independent contractor report those payments to the IRS using this 1099 form.

Form 1099-MISC

Entities that give you other forms of income as a freelancer or independent contractor, such as prize money or money for healthcare, report those payments to the IRS using this 1099 form.

Avoid 1099-Misc

There are ways to lower the amount of tax you pay as a 1099 self-employed individual. Here are five proven strategies.

Form 1099-K

If you receive payments of $600 or more as a self-employed individual through credit card companies and payment services like PayPal, they report those payments to the IRS using this 1099 form.

Paypal

Here's how to receive a 1099-K from PayPal and how to use it to file and pay your 1099 taxes.

Shopify

Here's how to receive a 1099-K from Shopify and how to use it to file and pay your 1099 taxes.

Venmo

Here's how to receive a 1099-K from Venmo and how to use it to file and pay your 1099 taxes.

Form 1099-MISC VS Form 1099-NEC

Understand what makes these 1099 forms different from each other and what they mean for you as a 1099 freelancer, independent contractor or self-employed individual.

Form 1040-ES

This vital tax form for self-employed individuals and freelancers is how they pay quarterly taxes, which they need to estimate (ES means estimated taxes).

Form 1040

This is the most common document in the US tax system. It's the master tax return that every American fills out.

Form 1040 Schedule C

Running a business by yourself? This is the tax return 2022 schedule where you report how much (knock on wood) profit you made or how much you (heaven forbid) lost over the course of the year.

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