BulldogTom Posted January 25, 2014 Report Share Posted January 25, 2014 If you use the simplified method, the 8829 goes blank. I assume that is the way it is intended by the IRS and ATX for the form to work. Question, what do you do if there is not enough income to support the entire deduction. I think I read somewhere that it is lost and cannot be carried over to the next year? Can someone confirm? So, if the business cannot support the entire deduction, even if the simplified method deduction amount is greater than the actual method amount, it is better to use the actual method so that you can carry the expenses to the following year. Does that sound logical? Tom Hollister, CA Quote Link to comment Share on other sites More sharing options...
Janitor Bob Posted January 25, 2014 Report Share Posted January 25, 2014 I am looking at the same situation and wondering the same thing. Quote Link to comment Share on other sites More sharing options...
kcjenkins Posted January 25, 2014 Report Share Posted January 25, 2014 From Rev. Proc. 2013-13 .08 Limitations. (1) Taxpayers using this safe harbor method to compute their deduction must continue to satisfy all requirements of § 280A for determining their eligibility to claim a deduction. For example, a taxpayer may claim a deduction for a business use described in § 280A©(1) for a portion of a residence only if that portion is exclusively used on a regular basis for business purposes. As a further example, a taxpayer who is an employee may deduct expenses attributable to a business use of a residence described in § 280A©(1) only if that use is for the convenience of the taxpayer’s employer.(2) The amount of the deduction computed using the safe harbor method provided by this revenue procedure cannot exceed the gross income derived from the qualified business use of the home for the taxable year reduced by the business deductions described in section 4.05 of this revenue procedure (deductions unrelated to the qualified business use of a home). Any amount in excess of this gross income limitation is disallowed and may not be carried over and claimed as a deduction in any other taxable year. Quote Link to comment Share on other sites More sharing options...
SFA Posted January 25, 2014 Report Share Posted January 25, 2014 Thanks KC, so great to get the answers here! About the ATX 2013 program. I took an early interview with a business client two nights ago, and wish I had explored the feature before his arrival. I wasn't familiar with how to input this new option. Form 8829 works very different this year. 1 Quote Link to comment Share on other sites More sharing options...
Jack from Ohio Posted January 25, 2014 Report Share Posted January 25, 2014 The changes are on Schedule C. If the business is going to show a loss, or the standard rate would drive a loss, then the regular method is the correct method to use, including using Form 8829. To use the regular method, do not input any home office information on the Schedule C and use 8829 as before. Any entry in the home office area on Schedule C blanks out 8829. 1 Quote Link to comment Share on other sites More sharing options...
SFA Posted January 25, 2014 Report Share Posted January 25, 2014 To use the regular method, do not input any home office information on the Schedule C and use 8829 as before. Any entry in the home office area on Schedule C blanks out 8829. Thanks Jack, I was hoping to do a comparison and take the better result, like we do with vehicles. I filled out the regular F8829, then searched for how to do input the standard rate. Should have just used a calculator! Quote Link to comment Share on other sites More sharing options...
Jack from Ohio Posted January 25, 2014 Report Share Posted January 25, 2014 Thanks Jack, I was hoping to do a comparison and take the better result, like we do with vehicles. I filled out the regular F8829, then searched for how to do input the standard rate. Should have just used a calculator! The standard rate is $5 per square foot. Fill in the 8829 and get that number. Then take the office square footage times $5, and voila, your comparison. Standard rate max is $1,500. 2 Quote Link to comment Share on other sites More sharing options...
BulldogTom Posted January 25, 2014 Author Report Share Posted January 25, 2014 The standard rate is $5 per square foot. Fill in the 8829 and get that number. Then take the office square footage times $5, and voila, your comparison. Standard rate max is $1,500. There is a new input screen in ATX this year. Making the election to use the simplified method is not done directly on the schedule c, it is done on the worksheet. If you check the box for the simplified method on that input sheet, the 8829 blanks out and the simplified method calculation flows directly to the schedule C. If you unclick the box, the info in the 8829 comes back. Pretty handy when you get used to where to go in the program to make it work. The input sheet also has info for the allocations of multiple offices in the home. I have not played with that yet, but it looks to be a pretty neat feature. Thanks KC for the confirmation on the regs for carryovers. Thanks to Jack for the confirmation on the way to handle loss situations. Tom Hollister, CA 1 Quote Link to comment Share on other sites More sharing options...
Mr. Pencil Posted January 28, 2014 Report Share Posted January 28, 2014 it is better to use the actual method so that you can carry the expenses to the following year. You still need to consider all factors. For one thing, home-office documentation is often pretty weak, or just not worth the trouble for a small space. And with the simplified method you can double-dip, taking as much as possible on Schedule C while still getting full Schedule A deductions for property tax and mortgage interest. Quote Link to comment Share on other sites More sharing options...
BulldogTom Posted January 28, 2014 Author Report Share Posted January 28, 2014 For one thing, home-office documentation is often pretty weak Not so much in my opinion. There is generally good documentation for Mortgage interest, Property Taxes and Depreciation. Utilities are pretty well documented as well. Those are the big items on the 8829. And you still have the issue of documenting the business purpose of the home in either situation. In future years, those carried forward deductions will not only reduce income tax, but SE tax as well. You have to look at the entire picture, yes, but that picture also includes the future tax implications as well. Tom Hollister, CA Quote Link to comment Share on other sites More sharing options...
Lion EA Posted January 28, 2014 Report Share Posted January 28, 2014 My clients forget to add up their oil, electricity, propane, insurance, etc., and tell me SALY. At least I can offer them an alternative to going home and finding all their bills from a dozen different suppliers. I can tell them what it was last year vs. what they would have this year using the simplified method and if future years are impacted, so they can decide if it's worth it to them to dig deeper. Quote Link to comment Share on other sites More sharing options...
joanmcq Posted January 29, 2014 Report Share Posted January 29, 2014 My home office people keep good records. I make them do so, otherwise no deduction. Now at least I can offer the simplified method of they do have a bona fide OIH. Quote Link to comment Share on other sites More sharing options...
Kimberly K Posted January 29, 2014 Report Share Posted January 29, 2014 When I worked at Block, if the client did not want to figure the square footage for home and room used for home office, we would use the entire number of rooms in the home and for the business use: the room(s) used exclusively for business. With the safe harbor method this will not work, when I used the safe harbor method on a return vs what was used last year, the safe harbor method was a larger deduction. Thanks for the reminder on the carryovers, I quess I will need to take it by each individual clients return. Quote Link to comment Share on other sites More sharing options...
Robin Posted February 15, 2014 Report Share Posted February 15, 2014 There is a new input screen in ATX this year. Making the election to use the simplified method is not done directly on the schedule c, it is done on the worksheet. If you check the box for the simplified method on that input sheet, the 8829 blanks out and the simplified method calculation flows directly to the schedule C. If you unclick the box, the info in the 8829 comes back. Pretty handy when you get used to where to go in the program to make it work. The input sheet also has info for the allocations of multiple offices in the home. I have not played with that yet, but it looks to be a pretty neat feature. Thanks KC for the confirmation on the regs for carryovers. Thanks to Jack for the confirmation on the way to handle loss situations. Tom Hollister, CA I did see where the election to take to take the simplified method appears on the HO worksheet, but what needs to be done to get the home office deduction (either method) to carry over to the 2106 line 4? -Robin Quote Link to comment Share on other sites More sharing options...
Jack from Ohio Posted February 15, 2014 Report Share Posted February 15, 2014 Could someone please tell me where on the worksheet is the election to take the simplified method. What needs to be done to get the home office deduction (either method) to carry over to the 2106? -Robin There is a place on the 2106 for OIH related to the W-2 job. 8829 is not needed. Quote Link to comment Share on other sites More sharing options...
Robin Posted February 15, 2014 Report Share Posted February 15, 2014 There is a place on the 2106 for OIH related to the W-2 job. 8829 is not needed. I am just using the worksheet to tally my numbers. Do we just take the resulting number from the worksheet and link to 2105 line #4 or should it flow automatically? -Robin Quote Link to comment Share on other sites More sharing options...
BulldogTom Posted February 15, 2014 Author Report Share Posted February 15, 2014 I don't have the software in front of me right now, but there is a check box in the worksheet that say use simplified method or use actual method. If you check either box, the amount will flow to the 2106. I think you have to link the office to the form as well. Sorry, if I had it in front of me I would point out exactly where it is at on the form. Tom Hollister, CA Quote Link to comment Share on other sites More sharing options...
Robin Posted February 15, 2014 Report Share Posted February 15, 2014 Thanks Tom. But I think the problem stems from that it does not allow me to input the gross wages on line 8 of the HO worksheet. The message says the field can't be modified. If I can get that to work, I think the deduction would carry over to the 2105. Quote Link to comment Share on other sites More sharing options...
Jack from Ohio Posted February 15, 2014 Report Share Posted February 15, 2014 Make sure the drop down boxes all say 2106. Quote Link to comment Share on other sites More sharing options...
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