Form 8829 Line 42 depreciation is wrong when your home office percentage changes year-over-year. This is a software bug. I changed my home office from 10% to 5% this year. TurboTax is understatin...
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Form 8829 Line 42 depreciation is wrong when your home office percentage changes year-over-year. This is a software bug. I changed my home office from 10% to 5% this year. TurboTax is understating my depreciation deduction by ~$242, and I can show exactly why. This is not an input error. I can reproduce it by changing only the business-use percentage while keeping everything else the same. The deduction should scale proportionally with the percentage — it's a straight multiply on the form — but it doesn't. Below ~3%, depreciation drops to $0 entirely. That's wrong: you don't lose your deduction because your office is small. I've seen other threads in this forum with the same symptom on 8829 that were closed without resolution. I've done the math to isolate the bug and I can reproduce it to within rounding precision. Details below — this needs to get to the engineering team. The symptom Per the form instructions, Line 42 = Line 40 × Line 41. TurboTax is not computing that product. Holding all home information constant and varying only business-use percentage: - 1.66% → $0 - 3.33% → $173 - 5.00% → $527 - 6.66% → $882 - 10.00% → $1,590 These should be proportional to the percentage. Instead they follow a line with an offset — consistent with a hidden subtraction being applied before the depreciation calculation. The root cause My home was purchased March 2014, 39-year SL/mid-month. I used 10% business use for prior years and reduced to 5% this year. TurboTax appears to be: 1. Taking cumulative depreciation already claimed at the old 10% basis (~$14,634 over ~9.8 years) 2. Computing the new office basis at 5% ($29,997) 3. Subtracting the old cumulative depreciation from the new, smaller basis ($29,997 − $14,634 = $15,363) 4. Spreading the remainder over remaining useful life ($15,363 ÷ 29.17 years ≈ $527) It also explains the offset pattern and why small percentages zero out. Why that's wrong The asset being depreciated is the entire home ($599,934), not the office portion. Each year, 1/39th of the home's basis depreciates, and the office-use percentage determines what fraction of that is deductible. After ~10 years, 10/39 of the home's basis has been consumed — leaving 29/39, or ~$446,101. At 5% business use, that's $22,305 of depreciable basis remaining over 29 years — $769/year. That's exactly what the straight Line 40 × Line 41 multiply produces. TurboTax is instead treating the office portion as the asset — subtracting $14,634 of prior depreciation (taken at 10%) directly from the new 5% basis of $29,997. That conflates the deductible portion with the underlying asset and double-counts the reduction when the percentage shrinks. Impact ~$242 understatement at my percentages. The error scales with the gap between old and new business-use percentage, and completely zeroes out the deduction at small percentages. This is affecting anyone who changed their home office size between tax years. Note that this same logic would overstate depreciation for someone starting a home office late in the asset's life. In the last year of a 39 year depreciation period, a 10% office would depreciate a full 10% of the house basis in a single year. I haven't verified this impact, but other threads have mentioned strange numbers that could very well be this.