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IRS.gov Website
Publication 587
taxmap/pubs/p587-007.htm#en_us_publink10003612

Worksheet To Figure the Deduction for Business Use of Your Home(p23)

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This worksheet is to be used by taxpayers filing Schedule F (Form 1040) or who are employees or partners, and who are using actual expenses to figure the deduction. If you are using the simplified method to figure your deduction, use the Simplified Method Worksheet, later.
taxmap/pubs/p587-007.htm#en_us_publink10003614
PencilWorksheet To Figure the Deduction for Business Use of Your Home
Use this worksheet if you file Schedule F (Form 1040) or you are an employee or a partner, and you are using actual expenses to figure your deduction for business use of the home. Use a separate worksheet for each qualified business use of your home.
PART 1—Part of Your Home Used for Business:  
1)Area of home used for business1) 
2)Total area of home2) 
3)Percentage of home used for business (divide line 1 by line 2 and show result as percentage)3)%
PART 2—Figure Your Allowable Deduction   
4)Gross income from business (see instructions)4) 
   (a)
Direct Expenses
 (b)
Indirect Expenses
   
5)Casualty losses5)    
6)Deductible mortgage interest and qualified mortgage insurance premiums6)    
7)Real estate taxes7)    
8)Total of lines 5 through 78)    
9)Multiply line 8, column (b), by line 39)   
10)Add line 8, column (a), and line 910)   
11)Business expenses not from business use of home (see instructions)11)   
12)Add lines 10 and 1112) 
13)Deduction limit. Subtract line 12 from line 413) 
14)Excess mortgage interest and qualified mortgage insurance premiums14)    
15)Insurance15)    
16)Rent16)    
17)Repairs and maintenance17)    
18)Utilities18)    
19)Other expenses19)    
20)Add lines 14 through 1920)    
21)Multiply line 20, column (b), by line 321)   
22)Carryover of operating expenses from prior year (see instructions)22)   
23)Add line 20, column (a), line 21, and line 2223) 
24)Allowable operating expenses. Enter the smaller of line 13 or line 23 24) 
25)Limit on excess casualty losses and depreciation. Subtract line 24 from line 1325) 
26)Excess casualty losses (see instructions)26)   
27)Depreciation of your home from line 39 below27)   
28)Carryover of excess casualty losses and depreciation from prior year (see instructions)28)   
29)Add lines 26 through 2829) 
30)Allowable excess casualty losses and depreciation. Enter the smaller of line 25 or line 29 30) 
31)Add lines 10, 24, and 3031) 
32)Casualty losses included on lines 10 and 30 (see instructions)32) 
33)Allowable expenses for business use of your home. (Subtract line 32 from line 31.) See instructions for where to enter on your return 33) 
PART 3—Depreciation of Your Home 
34)Smaller of adjusted basis or fair market value of home (see instructions)34) 
35)Basis of land35) 
36)Basis of building (subtract line 35 from line 34)36) 
37)Business basis of building (multiply line 36 by line 3)37) 
38)Depreciation percentage (from applicable table or method)38)%
39)Depreciation allowable (multiply line 37 by line 38)39) 
PART 4—Carryover of Unallowed Expenses to Next Year 
40)Operating expenses. Subtract line 24 from line 23. If less than zero, enter -0-40) 
41)Excess casualty losses and depreciation. Subtract line 30 from line 29. If less than zero, enter -0-41) 
taxmap/pubs/p587-007.htm#en_us_publink10003616

Instructions for the Worksheet To Figure the Deduction for Business Use of Your Home(p23)

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The Worksheet To Figure the Deduction for Business Use of Your Home is to be used by taxpayers filing Schedule F (Form 1040) or who are employees or partners, and who are using actual expenses to figure the deduction. The following instructions explain how to complete each part of the worksheet.
taxmap/pubs/p587-007.htm#en_us_publink10003618

Partners.(p23)

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See Partners under Where To Deduct, earlier, before completing the worksheet.
EIC
If you file Schedule C (Form 1040) and use actual expenses to figure your deduction, use Form 8829 to figure the deductions and attach the form to your return.
taxmap/pubs/p587-007.htm#en_us_publink10003621

Part 1—Part of Your Home Used for Business(p23)

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taxmap/pubs/p587-007.htm#en_us_publink10003622

Lines 1–3.(p23)

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If you figure the percentage based on area, use lines 1 through 3 to figure the business-use percentage. Enter the percentage on line 3.
You can use any other reasonable method that accurately reflects your business-use percentage. If you operate a daycare facility and you meet the exception to the exclusive use test for part or all of the area you use for business, you must figure the business-use percentage for that area as explained under Daycare Facility, earlier. If you use another method to figure your business percentage, skip lines 1 and 2 and enter the percentage on line 3.
taxmap/pubs/p587-007.htm#en_us_publink10003624

Part 2—Figure Your Allowable Deduction(p23)

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taxmap/pubs/p587-007.htm#en_us_publink10003625

Line 4.(p23)

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If you file Schedule F (Form 1040), enter your total gross income that is related to the business use of your home. This generally would be the amount on line 9 of Schedule F (Form 1040).
If you are an employee, enter your total wages that are related to the business use of your home.
taxmap/pubs/p587-007.htm#en_us_publink10003626

Lines 5–7.(p25)

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Enter only the amounts that would be deductible whether or not you used your home for business (that is, amounts allowable as itemized deductions on Schedule A (Form 1040)).
Under column (a), Direct Expenses, enter expenses that benefit only the business part of your home. Under column (b), Indirect Expenses, enter expenses that benefit the entire home. You generally enter 100% of the expense. However, if the business percentage of an indirect expense is different from the percentage on line 3, enter only the business part of the expense on the appropriate line in column (a), and leave that line in column (b) blank.
taxmap/pubs/p587-007.htm#en_us_publink100079158
Casualty losses.(p25)
Treat casualty losses as personal expenses for this step. You figure the amount to enter on line 5 by completing Section A of a 2017 Form 4684 as a worksheet. When completing line 17 of your worksheet version of Form 4684, enter 10% of your adjusted gross income excluding the gross income from business use of your home and the deductions attributable to that income. Include on line 5 of the Worksheet To Figure the Deduction for Business Use of Your Home, the amounts from lines 15 and 18 of your worksheet version of Form 4684. Don’t file this worksheet version of Form 4684; instead, keep it for your records. You will complete a separate Form 4684 to attach to your return.
To figure the casualty losses that you can include in your itemized deductions on Schedule A or the qualified disaster losses by which you may be able to increase your standard deduction, complete Section A on the separate Form 4684 using the personal portion of your casualty losses. See the instructions for line 32, later, for the business use of the home portion of your casualty losses that you must include in Section B of the separate Form 4684.
See the instructions for line 26, later, to deduct part of the casualty losses not allowed because of the limits on Form 4684.
taxmap/pubs/p587-007.htm#en_us_publink100079159
Qualified mortgage insurance premiums. (p25)
Treat qualified mortgage insurance premiums as personal expenses for this step. You figure the amount of qualified mortgage insurance premiums to include on line 6 (with your deductible mortgage interest) by completing Schedule A, line 13, as a worksheet in accordance with the Instructions for Schedule A. Your deductible mortgage insurance premiums are subject to a limit based on your adjusted gross income (Form 1040, line 38). When figuring your adjusted gross income for this worksheet version of Schedule A, line 13, exclude the gross income from business use of your home and the deductions attributable to that income. Don't file this worksheet version of Schedule A, line 13, or use it to figure the amount of qualified mortgage insurance premiums you can deduct as an itemized deduction on Schedule A; instead keep it for your records.
If you file Schedule F (Form 1040) or are a partner using your home for business and you itemize your deductions on Schedule A, be sure to claim only the personal portion of your qualified mortgage insurance premiums on Schedule A. The personal portion of mortgage insurance premiums on a home used for business doesn't include the business portion you deduct on Schedule E or F.
If you are an employee using your home for business, you will include all your qualified mortgage insurance premiums on Schedule A as explained under Where To Deduct, earlier.
If you file Schedule F (Form 1040), see Lines 14–22, later, to deduct part of the qualified mortgage insurance premiums not allowed because of the adjusted gross income limit.
taxmap/pubs/p587-007.htm#en_us_publink10003627

Lines 9–10.(p25)

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Multiply your total indirect expenses (line 8, column (b)) by the business percentage from line 3. Enter the result on line 9. Add this amount to the total direct expenses (line 8, column (a)) and enter the total on line 10.
taxmap/pubs/p587-007.htm#en_us_publink10003628

Lines 11–13.(p25)

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Enter any other business expenses that are not attributable to business use of the home on line 11. For employees, examples include travel, supplies, and business telephone expenses. Farmers generally should enter their total farm expenses before deducting office- in-the-home expenses. Do not enter the deductible part of your self-employment tax. Add the amounts on lines 10 and 11, and enter the total on line 12. Subtract line 12 from line 4, and enter the result on line 13. This is your deduction limit. You use it to determine whether you can deduct any of your other expenses for business use of the home this year. If you cannot, you will carry them over to the next year in which you use actual expenses to figure the deduction.
If line 13 is zero or less, enter zero. Deduct your expenses for deductible home mortgage interest, qualified mortgage insurance premiums, real estate taxes, casualty losses, and any business expenses not attributable to use of your home on the appropriate lines of the schedule(s) for Form 1040 as explained earlier under Where To Deduct.
taxmap/pubs/p587-007.htm#en_us_publink10003630

Lines 14–22.(p25)

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On lines 14 through 19, enter your otherwise nondeductible expenses for the business use of your home. These include utilities, insurance, repairs, and maintenance. If you rent, report the amount paid on line 16. If you file Schedule F (Form 1040), include any part of your home mortgage interest or qualified mortgage insurance premiums that is more than the limits given in Pub. 936. (If you are an employee, do not enter any excess home mortgage interest or qualified mortgage insurance premiums.) In column (a), enter the expenses that benefit only the business part of your home (direct expenses). In column (b), enter the expenses that benefit the entire home (indirect expenses). Multiply line 20, column (b), by the business-use percentage (line 3) and enter this amount on line 21.
If you deducted actual expenses for the business use of your home on your 2016 tax return, enter on line 22 the amount from line 40 of your 2016 worksheet. If you used the simplified method in 2016, enter on line 22 the amount from line 6a of your 2016 Simplified Method Worksheet.
taxmap/pubs/p587-007.htm#en_us_publink10003631

Lines 25–30.(p25)

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On lines 25 through 30, figure your limit on deductions for excess casualty losses and depreciation.
On line 26, figure the excess casualty loss by multiplying the business use percentage from line 3 by the part of casualty losses that would not be allowable if you did not use your home for business (that is, the casualty losses in excess of the amount on line 5).
On line 27, enter the depreciation deduction from Part 3.
If you deducted actual expenses for business use of your home on your 2016 tax return, enter on line 28 the amount from line 41 of your 2016 worksheet. If you used the simplified method in 2016, enter on line 28 the amount from line 6b of your 2016 Simplified Method Worksheet.
On lines 29 and 30, figure your allowable excess casualty losses and depreciation.
taxmap/pubs/p587-007.htm#en_us_publink10003632

Lines 31–33.(p26)

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On line 31, total all allowable business use of the home deductions.
On line 32, enter the total of the casualty losses shown on lines 10 and 30. Enter the amount from line 32 on line 27 of Form 4684, Section B. Attach a statement to your tax return showing how you calculated the deductible loss (you can use the worksheet as your attachment) and enter "See attached statement" above line 27 of Form 4684. See the Instructions for Form 4684 for more information on completing that form.
Line 33 is the total (other than casualty losses) allowable as a deduction for business use of your home. If you file Schedule F (Form 1040), enter this amount on line 32, Other expenses, of Schedule F (Form 1040) and enter "Business Use of Home" on the line beside the entry. Do not add the specific expenses into other line totals of Part II of Schedule F (Form 1040).
If you are an employee or partner, see Where To Deduct, earlier, for information on how to claim the deduction.
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Part 3—Depreciation of Your Home(p26)

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Figure your depreciation deduction on lines 34 through 39. On line 34, enter the smaller of the adjusted basis or the fair market value of the property at the time you first used it for business. Do not adjust this amount for changes in basis or value after that date. Allocate the basis between the land and the building on lines 35 and 36. You cannot depreciate any part of the land. On line 38, enter the correct percentage for the current year from the tables in Pub. 946. Multiply this percentage by the business basis to get the depreciation deduction. Enter this figure on lines 39 and 27. Complete and attach Form 4562 to your return if this is the first year you used your home, or an improvement or addition to your home, in business.
taxmap/pubs/p587-007.htm#en_us_publink10003635

Part 4—Carryover of Unallowed Expenses to Next Year(p26)

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Complete these lines to figure the expenses that must be carried forward to the next year in which you use actual expenses.