How do I allocate expenses for two home offices?
In TurboTax, that'll depend on whether the offices were for the same business or for two different businesses. Select your situation below for instructions.
Each business has its own separate home office
If you maintain a separate office for each business (for example, business #1 in the spare bedroom and business #2 in the basement), simply provide the requested details for each office space as you enter each business into TurboTax. We'll use this info (square footage, etc.) to calculate the expense allocations for each office.
Two different home offices for the same business
This is when you move to a new home during the tax year, or you move your office to a different location inside your home. (Expenses for multiple offices used concurrently for the same business in the same home are treated as though they belong to a single office.)
TurboTax supports up to two different home offices per Schedule C business, but only one office is allowed to use the simplified method, per IRS rules.
When you get to the home office section in TurboTax, we'll ask if you had more than one home office during the tax year (answer Yes) and if these offices were in the same home (answer No).
Eventually, you'll be asked for each office's percentage of use (this'll be filled in if you're using the simplified method). This is the percentage (up to 100%) of business activities conducted from your home office multiplied by the percentage of time you spent living at each location. Here are a few examples:
Example 1: You conduct 100% of your business from your home office, and you lived 3 months (25%) in the first home and 9 months (75%) in the second home. You'd enter 25 and 75 for the first and second office, respectively.
Example 2: You conduct 50% of your business from your home office, and you lived 3 months (25%) in the first home and 9 months (75%) in the second home. You'd enter 12.5 and 37.5 for the first and second office, respectively.
Example 3: You conduct 80% of your business from your home office, and you lived 6 months (50%) in each home. You'd enter 40 for each office.
In the end, the two numbers you enter should add up to the percentage of business activities conducted from your home office, up to but not exceeding 100.
After you've entered info about the second home office, you'll see a question about splitting expenses between the two offices. This refers to business expenses not specifically related to the home office, such as licenses, supplies, and so forth. This is used to calculate allowable expenses under the actual expense method.
