If you have two Schedule C's and both have a home office deduction, you have to split the amount of property tax between the two businesses. You cannot enter the total amount of property tax paid for each home office entry. This would cause the total deduction to be greater than what was actually paid. This is likely why TurboTax is giving you an error.
As an example, I completed a mock return and took the following steps:
- For simplicity, I assumed my property taxes were $40,000, Schedule C (1) got a home office allocation of 33%, Schedule C (2) also got a home office allocation of 33%
- First, I entered my home office deduction for Schedule C (1)
- I elected to enter my actual expenses
- For the amount of real estate taxes, I entered $20,000 (half of the $40,000 total).
- I checked off the box next to Real estate taxes entered here were already entered on another home office.
- Next, I entered my home office deduction for Schedule C (2)
- Repeated the same steps as shown above with Schedule C (1)
- Now, when looking at my return, my Schedule A shows a $26,680 property tax deduction on Line 5b, my Schedule C (1) shows an allocation of $6,660, and my Schedule C (2) shows an allocation of $6,660. These amount total the $40,000 in property tax. Any amount higher would be incorrect as I only paid the $40,000 in this example.
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