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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 29535
Experience:  Taxes, Immigration, Labor Relations
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I am wondering if I can take a home office deduction

Customer Question

I am wondering if I can take a home office deduction for a part of my apartment. I have a decently good income from a very flexible 40 hour a week job, but I also have a small business. I am aggressively reinvesting the small business's revenue into itself so I have no taxable income from the business. My last K1 netted me a $3,000 deduction.
My question is, can I take a home office deduction for the rooms I use to run my business even if the business has not taxable income? Can I take a deduction and apply it to my overall income (including the one I make from my day job)?
Submitted: 2 years ago.
Category: Tax
Expert:  Lev replied 2 years ago.
Hi and welcome to our site!If your gross income from the business use of your home equals or exceeds your total business expenses (including depreciation), you can deduct all your business expenses related to the use of your home.If your gross income from the business use of your home is less than your total business expenses, your deduction for certain expenses for the business use of your home is limited.Your deduction of otherwise nondeductible expenses, such as insurance, utilities, and depreciation of your home (with depreciation of your home taken last), that are allocable to the business, is limited to the gross income from the business use of your home minus the sum of the following.1. The business part of expenses you could deduct even if you did not use your home for business (such as mortgage interest, real estate taxes, and casualty andtheft losses that are allowable as itemized deductions on Schedule A (Form 1040)). 2. The business expenses that relate to the business activity in the home (for example, business phone, supplies, and depreciation on equipment), but not to the use of the home itself.If you are self-employed, do not include in (2) above your deduction for one-half of your self-employment tax.Carryover of unallowed expenses. If your deductions are greater than the current year's limit, you can carry over the excess to the next year in which you use actual expenses. They are subject to the deduction limit for that year, whether or not you live in the same home during that year.Figuring the deduction limit and carryover. If you file Schedule C (Form 1040), figure your deduction limit and carryover on Form 8829.
Expert:  Lev replied 2 years ago.
So - yes - you may still deduct home office expenses, but
because of business loss
- deduction of home office expenses is limited.
- disallowed deduction is not "lost" but carried to following year.
See fro reference
http://www.irs.gov/pub/irs-pdf/p587.pdf
http://www.irs.gov/pub/irs-pdf/f8829.pdf
Let me know if you need any help.
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