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If you rent the home you occupy and meet the requirements for business use of the home, you can deduct part of the rent you pay. To figure your deduction, multiply your rent payments by the percentage of your home used for business.

If you own your home, you cannot deduct the fair rental value of your home. See Depreciating Your Home in IRS Publication 587 Business Use of Your Home.

Where you deduct business use of home expenses depends on whether you are self-employed or an employee.

Employee

If you are an employee:

  1. You must itemize deductions on Schedule A (Form 1040) to claim expenses for the business use of your home, and any other employee business expenses. This generally applies to all employees.
  2. The expenses are reported on Line 4 of Form 2106 Employee Business Expense, and then transferred to Line 21 of Schedule A.

To enter information for employee business use of home expenses in TaxAct®:

  1. From within your TaxAct return (Online or Desktop) click on the Federal Qtab. On smaller devices, click in the upper left-hand corner, then select Federal.
  2. Click Itemized or Standard Deductions to expand the category, then click Unreimbursed employee expenses - Subject to 2% of AGI limit
  3. The program will proceed with the interview questions for you to enter the appropriate information

Self-Employed

If you are self-employed and file Schedule C (Form 1040):

  1. You would complete Form 8829 for Expenses for Business Use of Your Home.
  2. The calculation is then transferred to Schedule C, Line 30.
To enter information for self-employed business use of home expenses in TaxAct:
  1. From within your TaxAct return (Online or Desktop) click on the Federal tab. On smaller devices, click in the upper left-hand corner, then select Federal.
  2. Click Business Income to expand the category, then click Business income or loss from a sole proprietorship
  3. Click Add to create a new copy of Schedule C, or click Review to review a copy already created
  4. Continue to the screen titled Business Income - Home Business Use and click Yes
  5. The program will proceed with the interview questions for you to enter the appropriate information

Refer to IRS Publication 587 for additional information.


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