Publication 587 |
2001 Tax Year |
Instructions for the Worksheet
If you are an employee, a partner, or you file Schedule F (Form
1040), use the preceding worksheet to figure your deduction for the
business use of your home. The following instructions explain how to
complete each part.
If you file Schedule C (Form 1040), use Form 8829 to figure the
deductions and attach the form to your return.
Part 1--Part of Your Home Used for Business
Lines 1-3.
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 day-care 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 Day-Care Facility,
earlier. If you use another method to figure your business
percentage, skip lines 1 and 2 and enter the percentage on line 3.
Part 2--Figure Your Allowable Deduction
Line 4.
If you file Schedule F, enter your total gross income from the
business use of your home. This would generally be the amount on line
11 of Schedule F.
If you are an employee, enter your total wages from the business
use of the home.
Lines 5-7.
Enter only amounts that would be deductible whether or not you used
your home for business. In other words, these amounts would normally
be allowable as itemized deductions on Schedule A (Form 1040). Enter
your expenses paid for deductible mortgage interest, real estate
taxes, and casualty losses. Include only the part of a casualty loss
that exceeds $100 plus 10% of adjusted gross income.
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.
Lines 9-10.
Multiply your total indirect expenses by the business percentage
from line 3. Enter the result on line 9. Add this amount to the total
direct expenses and enter the total on line 10.
Lines 11-13.
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 should
generally enter their total farm expenses before deducting office in
the home expenses. Do not enter the deduction for one-half of your
self-employment tax. Add the expenses on line 11 to the line 10
amount, 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 next year.
If line 13 is zero or less, enter zero. Deduct your expenses for
deductible home mortgage interest, 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.
Lines 14-21.
On lines 14 through 18, enter your otherwise nondeductible expenses
for the business use of your home. These include utilities, insurance,
repairs, and maintenance. If you rent, include the amount paid on line
18. If you file Schedule F, include any part of your home mortgage
interest that is more than the limits given in Publication 936.
(If
you are an employee, do not enter any excess home mortgage interest.)
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 19, column
(b) by the business-use percentage and enter this amount on line 20.
If you claimed a deduction for business use of your home on your
2000 tax return, enter the amount from line 39 of your 2000 worksheet
on line 21.
Lines 24-29.
On lines 24 through 29, figure your limit on deductions for excess
casualty losses and depreciation.
On line 25, 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
($100 plus 10% of your adjusted gross income).
On line 26, enter the depreciation deduction from Part 3.
If you claimed a deduction for business use of your home on your
2000 tax return, enter on line 27 the amount from line 40 of your 2000
worksheet.
On lines 28 and 29, figure your allowable excess casualty losses
and depreciation.
Lines 30-32.
On line 30, total all allowable business use of the home
deductions.
On line 31, enter the total of the casualty losses shown on lines
10 and 29. Enter the amount from line 31 on line 27 of Form 4684,
Section B. See the instructions for Form 4684 for more information on
completing that form.
Line 32 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 34 of Schedule F and write
"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.
If you are an employee, see Where To Deduct, earlier,
for information on how to claim the deduction.
Part 3--Depreciation of Your Home
Figure your depreciation deduction on lines 33 through 38. On line
33, 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 34 and
35. You cannot depreciate any part of the land. On line 37, enter the
correct percentage for the current year from the tables in Publication 946.
Multiply this percentage by the business basis to get the
depreciation deduction. Enter this figure on lines 38 and 26. 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.
Part 4--Carryover of Unallowed Expenses to Next Year
Complete these lines to figure the expenses that must be carried
forward to next year.
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