Difference between Schedule C Line 25 (utilities) and 8829 Utilities Expense

[parvitstax]

What is the difference here? I am seeing mixed responses and even the IRS publication is not clear to me. I can obviously only deduct in one location or the other but there is a loss limit for 8829. Once that is reached I can add additional utilities expenses no longer qualified in 8829 on Line 25. Is there a rule that prevents this?

[abctax55 · Accepted solution]

Is there a rule that prevents this?

Yes... THAT is the whole point of the percentage allocations on the F 8829.

The line on the Sch C is for direct utility expenses - that perhaps are paid to the landlord (ones that aren't included in any CAM charges).  It is not to be used for OIH utilities. 

[abctax55]

(Bruce... you're up late...)

[parvitstax]

What about if you run your actual business out of your home?

For example, a plant store. Wouldn't business use percentage of water and electricity bill be direct Line 25 expenses? Operating your business from your home would then apply here.

[abctax55]

There is a specific place on the F 8829 to put those 'direct' costs.

What you are trying to do circumvents the limitations on OIH deductions when there's an overall loss.

Use the 8829 the way it is intended.

[parvitstax]

fair enough

[qbteachmt]

"What is the difference here?"

Carpenter installs 220V in the Shop, so that is Direct and fully Sched C. Meanwhile, also has 110V from residential drop powering house and attached shop space, so the 110V is allocated (shared).

Does that help?