Home Office Excess Real Estate Taxes

[dwheat17]

This is very unclear to me.  I'm not sure why TT cannot calculate this for me.

Some say I need to use some type of prorated excess others say just use your property taxes plus your state and local taxes and subtract 10,000 and then that is your excess.  I'm not even sure where to find my state and local states in TT.  I found something on schedule A but that was just what I paid.  Is that for the calendar year 2023 and is that what I want?  

Please advise as I am thoroughly confused on this.

[Vanessa A]

What exactly are you trying to do?  If you have a home office, this is not reported on Schedule A.  Schedule A is for itemized deductions.  Itemized expenses include mortgage interest, state and local taxes up to $10,000, medical expenses in excess of 7.5% of your AGI, charitable donations and casualty and losses in excess of 10% of you AGI with the first $100 not counting towards the loss.  Your health insurance and all medical expenses are only deductible for the amount that is over 7.5% of your AGI.  This means if your AGI is $50,000, then the amount that is over $3,750 is deductible.  

Then your total itemized expenses would need to be greater than your standard deduction below in order to benefit from your insurance premium payments. 

TurboTax will automatically transfer your state and local taxes to your itemized deduction section as you enter your W-2 and any other items showing taxes withheld or estimated taxes paid. 

The 2023 Standard Deductions are as follows:

• Married Filing Joint (MFJ)              $27,700
• Married Filing Separate (MFS)      $13,850
• Head of Household (HOH)             $20,800 
• Single                                                     $13,850                                

Blind and MFJ or MFS add $1,500

Single or HOH if blind add $1,850

Are you self-employed and have a home office?  If so, then you can enter a prorated amount of your Home Mortgage interest and your Home Property taxes as expenses for your home office on Schedule C.  You would not deduct any type of state and local sales taxes for this.  You would ONLY enter your property taxes. As you walk through the home office section, you would be prompted to enter the size of your office and the total size of your home.  So, if your home office was 200 Sq. Ft., and your home is 2,000 sq. ft. you would get a deduction for 10% of your property taxes paid IF you chose to use the actual expenses for your home office deduction instead of the standard deduction for your home office deduction. 

The Home Office Deduction

Standard versus Itemized Deduction

[dwheat17]

I am self-employed and have a home office.  While going through the home office "interview' it asks you to enter your Excess Real Estate Taxes.  My question is how do I figure out what that is for the purposes of the Home Office "interview"?

BTW, I only referred to Scheduled A because the help for that  field referenced it.

[Vanessa A · Accepted solution]

Ok.  If you did NOT itemize your return, but you own your home and paid property taxes, then a few steps back it asked for you to enter your real estate taxes.  In that section, if you are NOT itemizing, then you would not enter anything there.  If you DID itemize your return, then you would enter the amount of all the taxes you paid in this section.  This would ONLY be property taxes, it would NOT include sales or income taxes you paid.

Again if you DID NOT itemize, then  you will enter the ENTIRE amount of taxes you paid on your home in the Excess Real Estate taxes. 

 If you DID itemize, you will not enter anything in the Excess Real Estate Taxes, instead you would have entered it in the previous spot for Real estate taxes and you will leave the Excess Real Estate tax box blank. 

[dwheat17]

Thank you.  So just to verify.  I did itemize and my real estate taxes plus my state and local taxes are well over 10,000.  Having said that, because I did itemize I left the Excess Real Estate Taxes at zero.  Is that correct?

[Vanessa A]

Yes, you are correct in leaving the excess blank.  

On the Enter Real Estate taxes (not the excess) you could just use your tax bill to enter the amount paid, or the amount that is listed on your 1098.  This would remove the frustration of figuring out the sales and income tax portion. 

[dwheat17]

Great thank you.  I'm sure don't know why this step could not be automated.

[MysticMates]

I'm reading all of these examples but not confident of my understanding.  My wife and I make a product for local artisan events.  I use a room exclusively for design work on a work computer, and I cut designs on a machine in the same room.  All raw materials are also in that room.  Nothing personal is there.  My wife uses another room for making the product.  We use other parts of the house exclusively for storing products.  All together I've estimated 650 sq ft of our 2700 sq ft home.  I did NOT itemize, but did take the standard deduction.  How do I answer the question, "Do you have any excess real estate taxes?

[MysticMates]

Hmmmmm.....I thought I might have a response by now.  I went to chatGPT and they told me enough to move on with a cautious, conservative approach, and some advice.  Having a gig business makes me nervous with taxes enough and I really need more  immediate help.  I want to deduct all that is correct, not just careful!

[CatinaT1]

Where are you seeing the question about excess real estate taxes? I am thinking where and why you are seeing this question is so it will allocate any real estate taxes beyond what you are using for business use of home to your schedule A if you were itemizing, but I can't be sure without more context.

Know Your Tax Lingo: Self Employed & Gig Workers

Can I take the home office deduction?