You can make an adjustment to your Schedule C income in order to take a home office deduction as long as you are using the desktop software, as you will need Forms mode for the manual entry.
If you have not elected and submitted the Mark-to-Market (MTM) accounting method, then go to Forms Mode to view your Schedule D. Line 16 of Schedule D will show the overall gain or loss being reported on your return. If you did not report any transactions during the year as an ‘investor’ and Schedule D shows only your gains/losses from being a ‘trader’, then line 16 is the amount you use in the home office instruction below. Otherwise, you must do some math outside of your return to determine only the overall gain/loss from transactions associated with your business as a ‘trader’. Transactions as an investor (for example, selling a long-term holding) cannot be considered to be income associated with your business as a trader.
For traders who claim a home office on their Schedule C, a manual adjustment must be made to show that the trader business had a gain for the year. Otherwise, the home office deduction is disallowed. Use the following steps to make that manual adjustment:
- In Forms Mode, go to Form 8829
- Scroll to the Line 8 Calculation Smart Worksheet
- Enter the ‘trader’ gain amount (referenced in the instructions above) on line C2
From <Link to Annette's full instructions>
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