home office Interest and taxes deduction must be reviewed-diagnostics error

[bcs60062]

I am using Form 8829 and splitting interest & re taxes between the Home Office deduction and schedule A.

When I run the review, I am getting a " Diagnostic error to fix.  It says to review the deduction on schedule A but there is no way to clear this error.

[Just-Lisa-Now-]

Youre entering full amounts into the 8829 and it should be throwing the personal portion to Sch A.   Have you reviewed the amounts? are they correct?

[bcs60062]

I entered the % based on the home office sq. ft of re taxes and interest as direct expenses on the 8829. The remaining taxes and interest went to schedule A. 

[BCW60]

I'm having errors on form 8829 also, not specifically the same.

I have two Sch C businesses, so allocating expenses between both home office 8829's.

Settings for both #1 & #2 home office: 

• Sq Ft Allocation - same total 3200 sq ft, but allocating total home office and inventory storage area between the two.  So one would be 120 sq ft, and the other would be 350 sq ft.
• simplified = no for both
• both were used for ALL of 2020, first office started 1/1/19, and second started 1/1/20
• Percent of Gross income = 100% for both

specific results for each 8829:

• First 8829 (Net Loss) - I input Mortg Int, Prop Tax, Home Ins, Utilities -- It allows the home office expense to INCREASE the LOSS.   
• Second 8829 (Net Loss) -- same numbers input (checked box in smart worksheet - This is 2nd 8829), and again, it INCREASES the LOSS.

Assuming this were correct, the un-allocated or NET Mortg Int and Prop Tax does properly flow thru to Sch A.

I have had other times when it doesn't allow the home office expense thru if there is a loss.  Not sure what is different.

As I understand, there is NO circumstance where a home office allocated expense should be allowed if there is a loss.  It would carryover the unused expenses, but not allow the loss to increase in current year.  Am I missing something?

In addition -- I noticed that the QBI carryover on line 29 of the Carryover sheet was updated for the combined losses for both business which included the home office expenses.

[Just-Lisa-Now-]

Mort Int and Prop Tx will still be used, even with a loss.

[BCW60]

Thank you!!   I believe I finally get it.  

I have been viewing a the 8829 home office as an "all or nothing", so when I read the instructions, I was expecting the entire allocation was NOT allowed with a loss.  Now I see that the Mortg & Int ARE ALLOWED with a loss, and the lower section of other indirect expenses are NOT allowed with a loss and are carried over to next year.