Today TaxMama hears from Mark in Illinois, with this problem. “Taxpayer has claimed the home office deduction for a couple of years. There is a build up of carryover expenses. During 2008 taxpayer quit doing business from his home. Taxpayer continued in the same line of business for the remainder of the year from a location where he signed a rental agreement. Are the carryover expenses lost forever? Is there any way this taxpayer can claim these expenses?”
Dear Mark,
Have I got great news for you.
As long as your client stays in business, he can use that expense carryover.
Ideally, since he has now signed a lease and made more of a commitment to work at this business, he is now turning a profit – or starting to.
All he has to do is attach the Form 8829, Office in Home Expenses, to his Schedule C. Don’t fill out the top section. Just use the bottom part, which shows the carryovers.
Use the carryovers to reduce his Schedule C profits until they are all used up.
More good news – these expenses will reduce his Schedule C profits – and his self employment taxes, too.
And remember, you can find answers to all kinds of questions about office in home expenses and other tax issues, free. Where? Where else? At TaxMama.com.
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- IRS Form 8829 :: Office in Home
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