office in home and std deduction

[joanv]

was at education and was mentioned that if office in home ie.8829-then needs to use sch A for deductions, not std deduction on 1040.  Can't find this written anywhere-anyone else know about this/ Could make a big difference.

Joan

[dascpa]

Either you misunderstood or your instructor was clueless.  No more 2106 expenses therefore for employees no office in home deduction. Only applies to Sch C.

[Just-Lisa-Now-]

I feel like there is something  about the mortgage interest and property taxes with 8829 and whether you use standard or itemize...I have so few of these, I can't remember how it works.

@TaxGuyBill  I feel like I saw you explain something about this last year., does this ring any bells?

[joanv]

not talking about 2106, asking about 8829 where deducting int + taxes on the sch c-was told that if claimed on the 8829, needed to use sch A instead if standard deduction on 1040-was from IRWS atty. to this speaker.

[joanv]

meant IRS

[TaxGuyBill]

You may have misunderstood.  You usually end up with the same results.

If you itemize, then you enter the mortgage interest and taxes on Lines 10 and 11 of Form 8829 (if you are hitting the $750,000/$1,000,000 limit, then part of it may go to lines 16 and 17).

If you don't itemize, they go on Lines 16 and 17.

[joanv]

asking, because the standard deduction sometimes is higher than interest & taxes, charity -but still limited to schedule A-

just haven't written anywhere I've looked.

Know where I can look? 

[joanv]

what I'm saying, they have to itemize if using int & taxes on 8829, and don't know where to find written.

Sometimes std deduction is higher, so then no 8829?

[TaxGuyBill]

As we've said, you misunderstood what the speaker was talking about.  So you will never find it written because you misunderstood something.

It has to do with when the 8829 is limited due to the business income limitation on Line 7 of 8829.

It USED to be said that even if it is limited (such as a loss on Schedule C), you can still take the mortgage interest and taxes on the 8829 in the current year.

But a court case (and thereafter the IRS) determined that is only allowed if you Itemize.  If you don't itemize and they are being limited on the 8829 due to business income, you can no longer take the deduction on the 8829 for the interest and taxes.  They would be carried to next year.

But if the office expenses are NOT being limited, there is no effect and it is treated the same as it always has been.

[joanv]

not asking about limitations, and talked to others attending the seminar, so i thought I'd ask here, for all of us-guess no one has heard about this as yet.  Sometimes I misunderstand, but the other 2 agreed with me.

Guess I still have to look elsewhere,

Thanks anyway

[TaxGuyBill]

In some cases you people attending a seminar may have the ability to contact the speaker of the seminar. You may want to see if that is possible, and ask for clarification on whatever he said.

[qbteachmt]

"what I'm saying, they have to itemize if using int & taxes on 8829, and don't know where to find written.

Sometimes std deduction is higher, so then no 8829?"

I wonder if this is not a reference to the covid disaster declaration, which you can see is provided for in the 8829 instructions, for lines 9, 10 and 11:

https://www.irs.gov/instructions/i8829

Specifically, about here:

If you are filing Schedule A to increase your standard deduction by a net qualified disaster loss, see Casualty losses reported on line 9, later.

Tip:

You may prefer to itemize your deductions on Schedule A to claim amounts on lines 9, 10, and 11, even if your total personal deductions are less than the standard deduction.

I put the Bold indicators.

[qbteachmt]

Sometimes std deduction is higher, so then no 8829?"

I wonder if this is not a reference to the covid disaster declaration, which you can see is provided for in the 8829 instructions, for lines 9, 10 and 11:

https://www.irs.gov/instructions/i8829

Specifically, about here:

If you are filing Schedule A to increase your standard deduction by a net qualified disaster loss, see Casualty losses reported on line 9, later.

Tip:

You may prefer to itemize your deductions on Schedule A to claim amounts on lines 9, 10, and 11, even if your total personal deductions are less than the standard deduction.

I put the Bold indicators.

[JRC]

Yes you must Itemize if you are Deducting Mortgage Interest on Line 10b of Form 8829. Even though your Itemized Deductions are Less than the Standard Deduction. Instructions for Form 8829 will go through each line and if you have to Itemize or not. My understanding is if you use Lines 9-11 (Col. b) you cant use the standard deduction and must Itemize.

[George4Tacks]

8829 Instructions, bottom of page 2

Taxpayers claiming the standard deduction. If you claim the standard deduction, you will not include any mortgage interest, mortgage insurance premiums, or real estate taxes on lines 10 and 11; instead, you will claim the entire business use of the home portion of those expenses using lines 16 and 17. If you are not increasing your standard deduction by a net qualified disaster loss, then you will not include any casualty losses on line 9; instead, you will claim the entire business use of the home portion of your casualty losses on line 29. If you are filing Schedule A to increase your standard deduction by a net qualified disaster loss, see Casualty losses reported on line 9, later.

You may prefer to itemize your deductions on Schedule A to claim amounts on lines 9, 10, and 11, even if your total personal deductions are less than the standard deduction.

[TaxKen]

Another Sch C 8829 Question - if I have 400 left of Sch C income before 8829 deductions, and 2,000 of 8829 expenses, its limited to the 400 and C/F the remaining 1,600. However, this is the final year for this sch C business, and no further business income is anticipated. Can we bypass the income limitation for the CY and claim these deductions to increase the Sch C loss in the final year? Or are these carried forward indefinitely, being essentially lost forever?

[abctax55]

@TaxKen 

No, you can't adjust the income limitation.

Yes, the losses are suspended and "lost" if there's no further income for THAT business.

[TaxGuyBill]

---

@abctax55 wrote:

and "lost" if there's no further income for THAT business.

---

I don't have a citation handy, but I'm pretty sure I figured out the suspended expenses continue on with the house, and can be applied if a different business starts up.

[abctax55]

Bill... if you do ever find that cite (after the 18th, or the 15th, or the 16th.... or what EVER due date we are working under 😉 let me know.  I thought my research a few years ago indicated it followed the business.   But it's been a few years or more.

[TaxKen]

Thank you both!

I thought it followed the business also, leading to my unfortunate answer of them being lost forever since this is the final year for this particular Sch C.  With it being the final year, and having it all at risk, material participation, etc I thought we may get some favorable treatment for final year. However, I guess it is simply due to them being home office expenses vs separate structure office expenses as to why they don't allow them to be taken over the limit. 

If it does follow the house, would love the citation if available.

Thanks again!

[taxes96786]

Sch C options will transfer allocated home office expenses that apply to Sch A...ie property tax and mortgage interest.

[TaxGuyBill]

I'll need to look it up.  But many of you are thinking the opposite, so maybe I'm completely wrong.

I have a lot things "stuck in my head", and while most are based on something accurate, sometimes things mysteriously get stuck in there for no good reason.  🤣

[TaxGuyBill]

I did a little digging, and couldn't find much support on my idea, so I am probably wrong.

The only significant thing that I could find that remotely supported that it can be applied to another business is in a TaxProTalk discussion, and after some discussion, Dave Fogel stated:

But the IRS doesn’t describe the situation where the taxpayer has one office and uses it during the year for one business and the carryover that goes to the next year is applied to a different business. As a result, I have to answer your question by saying, “I think it’s unclear."

https://www.taxprotalk.com/forums/viewtopic.php?f=8&t=3489