How To Fill Out Form 8829 on Your Taxes

What is Form 8829?

Form 8829, also called the Expense for Business Use of Your Home, is the IRS form you use to calculate and deduct your home office expenses. By filling out Form 8829 and filing it with your tax return, you can calculate and claim your home office deduction and save money on your taxes. 

Your operating expenses as a freelancer can add up. But if you run a business out of your house or apartment, you may be able to take a home office deduction on your taxes, which allows you to lower your overall taxable income by writing off a portion of home expenses like rent and utilities. 

Who should use Form 8829?

You can use Form 8829 if you’re a freelancer, independent contractor, small business owner, or otherwise self-employed (unless you have an S corporation). To qualify, you must use a portion of your home for work purposes, and your home office must be your “principal place of business.”

What does it mean for your home office to be your principal place of business?

Your home office is considered your principal place of business if:

• You use your home office regularly and exclusively for your work
• You don’t have another, fixed location where you do the bulk of your work

Your home office doesn’t need to be a dedicated room in your house — the desk in your bedroom is fine, so long as you only use it for work.

Still not sure whether you qualify to write off your home expenses? Take our home office deduction quiz!

Can you claim a home office without filling out Form 8829?

Yes. The IRS has two methods for claiming this write-off. You can skip Form 8829 if you’re using the simplified method — you only need it for the regular expenses method. 

‍The simplified method

The simplified method is based on the size of your home office. This method of calculating home office write-offs is also known as the "standard" home office deduction. 

With the simplified method, you’ll calculate the square footage of your at-home workspace, up to 300 square feet, and multiply it by $5 per square foot to get the deduction amount — up to $1,500. That means that, if your workspace is more than 300 square feet, you won't get any additional tax benefits from the extra space. 

This calculation goes right onto your Schedule C (more on this in a minute).

The regular expenses method

The regular expenses method is based on:

• Your actual home office expenses
• The portion of your home taken up by your office

To calculate your deduction using actual expenses, you’ll:

1. Add up the actual amount you spend on home expenses
2. Multiply that by the percentage of your home taken up by your office space, or your “business-use percentage.”

The number you arrive at using Form 8829 is then claimed on Schedule C. 

Which one’s better: Simplified or regular expenses?

Simply put, there’s no right answer. Home workers might find during some tax years that one filing option is a better choice. That’s OK — you can decide each tax year which deduction method to use.

The simplified method is, as the name suggests, easier to claim for some tax filers. The regular expenses method will usually save you more money, but it also requires you to do more recordkeeping. 

The Keeper app makes tracking your home office expenses easier — by using it, you don't have to choose the simplified method solely out of convenience. Download the Keeper app and give it a try.

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How does Form 8829 relate to Schedule C?

You’ll use Schedule C to report both your self-employment income and your deductions. Form 8829 is used to calculate some of those deductions — specifically the ones associated with your  home office. 

If you used the regular expenses method to calculate your deduction for your home office, you’ll include that calculation on Line 30 of Schedule C.

You can't claim more in home office expenses than you brought home in income during the year. If your income is too low for the amount of home office expenses you're claiming, you can "carry over" whatever you have left over to the next tax year. You’ll use Form 8829 to report any carryover amounts you might be able to deduct during the next tax year. 

How does Form 8829 relate to Schedule A?

If you’re a homeowner, some of the expenses you can claim on Form 8829 can also be claimed as personal itemized expenses on Schedule A. To claim them on Schedule A, though, you’ll have to forgo the standard deduction. 

If you choose to do that, you’ll end up reporting some of the same expenses on both forms — like mortgage interest and real estate taxes. Your “business-use percentage” will be deducted on Form 8829. The remainder — for personal use — will be deducted on Schedule A.

If your mortgage interest was $5,000 and your home office takes up 20% of your house, then $1,000 goes on Form 8829 ($1,000), and what's left ($4,000) goes on Schedule A. 

Enter the total amounts you spend on home mortgage interest and real estate taxes in the following places:

• On Form 8829: In the “Indirect expenses” column on Lines 10 and 11
• On Schedule A: On Lines 5b, 8a, and 8b

The percentage you deduct on Form 8829 will be subtracted from the totals you enter on Schedule A. What's left are the remaining amounts that will be itemized on Schedule A.

What can you write off on Form 8829?

On Form 8829, you can deduct a portion of most things you spend on housing. Typically, these expenses are similar to what you’d pay if you rented or owned a commercial office space. These can include:

• 🏢 Rent
• 🏠 Home insurance
• 💸 Real estate taxes
• 🚿 Utilities
• 🛠️ Repairs and maintenance

How to fill out Form 8829, step by step

The best way to learn is with examples — so for our Form 8829 walkthrough we’ll look at how Poppy Perkins, a freelance aura reader, would complete her tax form. 

Part I: Part of Your Home Used for Business

The portion of your home taken up by your office space is known as your “business-use percentage.” This is what we’ll be calculating in part I. 

Line 1: Square footage of your home office

You might need to break out a tape measure for this one. The first section of Form 8829 asks you to enter the square footage of your home office. 

Poppy’s home office for her aura reading business is 15 feet by 10 feet, or 150 square feet.

Line 2: Total square footage of your home

Next, calculate the total square footage of your home. Poppy’s whole apartment is 600 square feet.
Line 3: Percentage of your home taken up by your office

Here, you’ll divide line 1 by line 2 to get the percentage of your home taken up by your home office. For Poppy, that’s 150/600, or 25%. Enter the result as a percentage.

Lines 4-6: For home daycare businesses

You’ll have to make additional calculations if you run a home daycare business. If you don’t run a daycare, lines 1, 2, 3, and 7 are going to be the only lines you use in this section. 

• For line 4, multiply the number of days you use your home as a daycare throughout the year by the number of hours your home is used as a daycare per day. Enter the product on this line
• For line 5, enter 8,760 if you didn't start or stop using your home for daycare during this tax year. If you did start or stop using your home for daycare, you have to prorate the number of hours based on how many days your home was available for daycare. Multiply 24 hours by the number of days available, and enter the result
• For line 6, divide line 4 by line 5, and enter the result as a decimal

Line 7: Business-use percentage of your home

Take the percentage you wrote down in line 3, and write it here. That’s the business-use percentage of your home. For Poppy, that’s 25%. 

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Part II: Figure Your Allowable Deduction

This section includes two types of expenses, direct and indirect.

Direct home office expenses are expenses that are paid only for the business part of your home — when Poppy painted her home office and bought a new camera rig for capturing her clients’ auras, those were direct home office expenses. 

Indirect expenses are expenses that are paid for the upkeep of your entire home, like Poppy paying the heating bill for her apartment. Indirect expenses can include insurance, general home repairs, and utilities. 

Line 8: Your self-employment income from WFH

Line 8 is for calculating the  total self-employment income you made from working in your home office. If you run your business entirely from home, you should be able to just put in your business profit or loss from line 29 on Schedule C here. 

Popp’s entire business this year came from working as an aura reader in her home. So she put her total income, $71,000, on line 8.

Parts A and B

For the next few lines, you’re required to categorize expenses as either direct or indirect. 

Some expenses, like your internet bill, can theoretically go both here and on your Schedule C. Make sure you don’t double-count them — choose one form for them.

Line 9: Casualty losses

Casualty losses are loss or damage of your home office due to a sudden, unexpected, or unusual event, like a natural disaster.

You’ll calculate the amount to enter on line 9 by completing Form 4684, Section A. 

If you are filing Schedule A, enter 10% of your adjusted gross income, excluding the gross income from business use of your home office and the deductions attributable to that income when figuring the amount to enter on Form 4684, line 17. Include on Form 8829, line 9, the amount from Form 4684, line 18. 

See the instructions for line 28, later, to deduct part of the casualty losses not allowed because of the limits on Form 4684. Do not file or use this Form 4684 to figure the amount of casualty losses to deduct on Schedule A. Instead, complete a separate Form 4684 to deduct the personal portion of your casualty losses.

Poppy (thankfully!) had a year devoid of natural disasters, so she wrote 0 on this line.

Line 10: Deductible mortgage interest

On line 10, include the total of your mortgage interest and qualified mortgage insurance premiums that count as direct or indirect expenses. 

If you paid for mortgage interest on a separate structure you used for work, like an unattached shed, that’s a direct expense. 

Don’t include mortgage interest on a loan that wasn’t used for your home. 

Line 11: Real estate taxes

Since she’s a renter, Poppy didn’t have any mortgage interest or real estate taxes to claim this year. But if you’ve paid real estate taxes, enter that figure on line 11.

Line 16: Excess mortgage interest

Use column B of line 16 to include any excess mortgage interest on any loans you used to buy, build, or substantially improve your home.

Line 17: Excess real estate taxes

Enter all the real estate taxes paid on your home in column B of line 17.

Line 18: Insurance

Include any homeowners or renters insurance you pay on line 18. Poppy pays $1,000 a year on her renter’s insurance plan.

Line 19: Rent

If you rent rather than own your home, include the rent you paid on line 19, column B. (If your housing is free and the value of the housing is tax-exempt, you can’t deduct anything here.)

Poppy’s annual rent is $32,000, which she puts on line 19, column B.

Line 20: Repairs and maintenance

As you might have guessed, line 20 is where you’ll put any repair and maintenance costs. This could include painting your home office, the cost of the handyman you hired to fix your vintage desk, or replacing a broken window.

Line 21: Utilities

Use line 21 to quantify your utility expenses. Common utilities you can deduct include:

• Water
• Sewer
• Electric
• Gas
• Trash
• Recycling

Subscriptions like cable TV, internet, security, and phone service can also be deducted here.

Poppy’s total utility costs for the year were $2,345.

Line 22: Other expenses

On line 22, you can include any home office expenses not included on lines 9 through 21. “Other expenses” are the regular expenses any business would have — they don’t have anything to do with your home business tax deduction. For Poppy, this includes cleaning services and her home office purchases. 

Line 25: Carryover of prior year operating expenses

Here, you’ll enter the amount from your Form 8829, line 43 from last year.

What if you didn’t fill out this form last year? If it’s your first year filling it out, just leave this line blank. Otherwise, use the number from line 43 of Form 8829 from the last time you filled out the form.

Line 27: Allowable operating excess

Your allowable operating expenses for the year is the smaller of the amounts you have on lines 15 and 26. 

If line 26 is greater than line 15, you can carry that excess amount forward for next year’s business taxes. For Polly, this figure is $81,000.

Line 28: Limit on excess casualty losses and depreciation

Subtract line 27 from line 15 to calculate your limit on excess casualty losses and depreciation. Your answer goes on line 28.

Line 29: Excess casualty losses and depreciation

If you have any, take the  casualty losses that are more than the amount reported on line 9 and multiply it by the business-use percentage of those losses. Enter the result on line 29.

Line 30: Depreciation of your home

Put the figure you get from calculating the depreciation of your home in part III, line 42, on line 30. (More on that later — including what depreciation means!)

Line 31: Carryover of prior year excess casualty losses and depreciation

If you didn’t file a Form 8829 last year, then this  is the amount of excess casualty losses and depreciation that you put in Part IV of the last Form 8829 you filed. If this is your first time filing the form, leave this line blank.

Line 33: Allowable excess casualty losses and depreciation

Here, you’ll enter the number from either line 28 or line 32 — whichever is smaller.  

Line 35: Casualty loss portion

Add the numbers on lines 14 and 33 and put that number on line 35. If you enter anything here, you’ll also need to carry it to Form 4684: Casualties and Thefts.

Line 36: The total value of your home office deduction

You'll calculate what you can ultimately deduct from your home office expenses by subtracting line 35 from line 34. Enter the number on line 36.

It also goes on Schedule C, line 30.

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Part III: Depreciation of Your Home

Depreciation is an allowance for the wear and tear on your home over time. This only applies to homeowners—so Poppy doesn’t have to worry about this part of the form. 

Because your home is now part of your business, you can take a depreciation deduction for it. That makes it just like any other business asset, which can be depreciated to reduce your taxable income.

Line 37: Your home’s adjusted basis or fair market value

Your home’s adjusted basis is its purchase price, plus major improvements and minus casualty losses. Fair market value is how much you could get for your home if you put it on the market. Enter the smaller of these two amounts on line 37. 

These amounts are likely to change over time. But for purposes of filling out Form 8829, use the figures from the day you started using your home for business. 

Line 38: Value of your land

On line 38, enter the cost of the land on which your home sits, or its fair market value — whichever number is smaller. Again, date these back to the date you first used your home for business.

Line 39: Basis of building 

Subtract line 38 from line 37. The difference (which you’ll enter on line 39) is the basis for the building — your property, minus the land it sits on.

Line 40: Business basis of building

Multiply line 39 by line 7. This is the total amount that you’ll be allowed to deduct, though it’s spread out over a period of several years.

‍Line 41: Depreciation percentage

For Line 41, you’ll enter the percentage of the business basis of your building that you’re allowed to deduct this year. 

This amount depends on when you started using your home for business and whether you stopped at some point before the end of the year. It’ll usually be between 0.107% and 2.564%. You can find the percentage that applies to you in the IRS’s instructions for filling out Form 8829.

Line 42: Depreciation allowance

To get your depreciation allowance, multiply line 40 by line 41. This is the amount of depreciation for your home that you can include in your Home Office Deduction this year. You’ll also enter this number on line 30.

Part IV: Carryover of Unallowed Expenses

You may not be able to claim a deduction for all of your expenses this year. If your home office expenses are more than your income, then your deduction for business use of your home gets limited. If this happens, you can carry over your excess, unallowed expenses into the next year. For example, Poppy’s total home office expenses this year were $80,000, and her gross income was $71,000 — she can carry $9,000 in unallowed expenses into next year.

Line 43: Operating expenses

To calculate these, subtract line 27 from line 26. If the resulting number is less than zero, write "0".

Line 44: Excess casualty losses and depreciation

Subtract line 33 from line 32 to get your excess casualty losses and depreciation. If the number is less than 0, write "0".

Finally! You made it to the end. By now, you should know how to successfully fill out Form 8829. But if you don’t want to fill out the very detailed Form 8829 — and all your other tax forms — by yourself, file your taxes through Keeper. We help independent contractors and freelancers discover tax deductions and file their taxes. Get started today.