office in home simplifed method

Forum|Forum|5 years ago
June 5, 2021
5 replies
32 views

Trying to figure out how to limit the simplified method as they were only in business 3 months out of the year anyone had this issue before?

Thank you

Lacerte Tax

This topic has been closed for replies.

P

PKCPAMST

Level 6

In Rev. Proc. 2013-13, the IRS provides this guidance for a qualified business use of a home for a portion of the taxable year.

Step 1. Add 300 square feet for each month of business use. (If business use area is less than 300 sq. ft., use that lower area.)

Step 2. Divide the sum from Step 1 by 12.

Step 3. Multiply the quotient from Step 2 by $5.

In Lacerte, go to Screen – Business Use of Home. In the Field, Business use area, enter the figure from Step 2, and in the Field 2=elect to use simplified method, enter 2.

C

cl54Author

Level 3

Yes I did that my question or problem is they didn't use the office all year due to covid they only used it 3 months of the year however I don't see anywhere in the system to prorate the months used on the simplified?

P

PKCPAMST

Level 6

Following Rev. Proc. 2013-13,

Step 1 - 300 sq. ft. x 3 months = 900.

Step 2 - 900/12=75 sq. ft. You will enter this in the Business use area.

Thus, the deduction will be limited to $375 for 3 months. This equals to one fourth of 300 x 5 =1,500 for 12 months.

Sign up

Login with SSO

Let's get you signed in

Login with SSO