Instructions for Form 8829 |
2003 Tax Year |
General Instructions
This is archived information that pertains only to the 2003 Tax Year. If you are looking for information for the current tax year, go to the Tax Prep Help Area.
Note:
If you are claiming expenses for business use of your home as an employee or a partner, or you are claiming these
expenses on Schedule F (Form 1040), do not use Form 8829. Instead, complete the worksheet in Pub. 587, Business Use
of Your Home (Including Use by Daycare Providers).
Use Form 8829 to figure the allowable expenses for business use of your home on Schedule C (Form 1040) and any carryover to 2004 of
amounts not deductible in 2003.
If all of the expenses for business use of your home are properly allocable to inventory costs, do not complete Form 8829.
These expenses are
figured in Part III of Schedule C and not on Form 8829.
You must meet specific requirements to deduct expenses for the business use of your home. Even if you meet these requirements,
your deductible
expenses may be limited. For details, see Pub. 587.
Who May Deduct Expenses for Business Use of a Home
Generally, you may deduct business expenses that apply to a part of your home only if that part is exclusively used on a regular basis:
- As your principal place of business for any of your trades or businesses; or
- As a place of business used by your patients, clients, or customers to meet or deal with you in the normal course of your
trade or business;
or
- In connection with your trade or business if it is a separate structure that is not attached to your home.
As explained on this page, exceptions to this rule apply to space used on a regular basis for:
- Storage of inventory or product samples and
- Certain daycare facilities.
Principal Place of Business
Your home office will qualify as your principal place of business for deducting expenses for its use if you meet the following
requirements.
- You use it exclusively and regularly for administrative or management activities of your trade or business.
- You have no other fixed location where you conduct substantial administrative or management activities of your trade or
business.
Administrative or management activities.
There are many activities that are administrative or managerial in nature. The following are a few examples.
- Billing customers, clients, or patients.
- Keeping books and records.
- Ordering supplies.
- Setting up appointments.
- Forwarding orders or writing reports.
Administrative or management activities performed at other locations.
The following activities performed by you or others will not disqualify your home office from being your principal place of business.
- You have others conduct your administrative or management activities at locations other than your home. (For example, another
company does
your billing from its place of business.)
- You conduct administrative or management activities at places that are not fixed locations of your business, such as in a
car or a hotel
room.
- You occasionally conduct minimal administrative or management activities at a fixed location outside your home.
- You conduct substantial nonadministrative or nonmanagement business activities at a fixed location outside your home. (For
example, you meet
with or provide services to customers, clients, or patients at a fixed location of the business outside your home.)
- You have suitable space to conduct administrative or management activities outside your home, but choose to use your home
office for those
activities instead.
More information.
For information on other ways to qualify to deduct business use of the home expenses, see Pub. 587.
Storage of Inventory or Product Samples
You may also deduct expenses that apply to space within your home used on a regular basis to store inventory or product samples
from your trade or
business of selling products at retail or wholesale. Your home must be the only fixed location of your trade or business.
If you use space in your home on a regular basis in the trade or business of providing daycare, you may be able to deduct
the business expenses
even though you use the same space for nonbusiness purposes. To qualify for this exception, you must have applied for (and
not have been rejected),
been granted (and still have in effect), or be exempt from having a license, certification, registration, or approval as a
daycare center or as a
family or group daycare home under state law.
Expenses Related to Tax-Exempt Income
Generally, you cannot deduct expenses that are allocable to tax-exempt income. However, if you receive a tax-exempt parsonage
allowance or a
tax-exempt military housing allowance, your expenses for mortgage interest and real property taxes are deductible under the
normal rules. No deduction
is allowed for other expenses allocable to the tax-exempt allowance.
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