Home Office Deduction For Traders

Forum|Forum|4 days ago
October 7, 2026
22 replies
102 views

Did turbo tax make changes to these forum as there were few threads I have saved with notification on but cant find them?

I want to take Home office deduction using simplified method.

Anyway, Traders don’t have income on Sch C, so after entering home info in Interview Mode Turbo Tax will tell you you are NOT getting home office deduction.

Lets say my Office is 300 Sq ft and Max deduction using simplified Method is 300*5 = 1500

I think there is Trick to it how to unlock this deduction in Turbo Tax.

Option 1 (I think this will be wrong option). One can enter fake income in Sch C Interview mode under Income or Sales. Reason I think this might be wrong is then this information not only will flow to Sch C but to other forms perhaps Sch 1 as well so will create taxation on fake income. I will create a new problem to solve a old problem.

Options 2. Not sure where to enter this information. One has to manually enter your Short Term gains from Sch D somewhere on Sch C or 8829 worksheet.

Q1. Does this number has to be accurate or in the range is fine? Lets say my short term gains are $54500 (made up number) so entering $50000 is ok?

Q2. Does this information feeds into some other forms as I don’t want to create double taxation

Q3. Could it be possible if you could insert as screen shot of Form and Line where you will be manually adding these short term gains to unlock home office deduction?

I looked but could not find Line on Form 8829 where one would enter this information.

Thanks

Best answer by M-MTax

The other considerations, if MTM is elected, are audit risk mitigation (less scrutiny) with an entity and easier health insurance and retirement deductions.

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Mike9241

Level 15

you're welcome. The upside to the M-T-M election, if available, is no wash sales, the trading income counts for QBI purposes since it is now ordinary income (capital gains don’t). The downside is the ordinary income aspect, but that may not be bad if your trading income is mostly short-term capital gains and you don’t have net long-term capital losses before taking into account ST activity (the net $3,000 capital loss limitation). Other downsides - sufficient activity is needed to qualify (nothing specific in the code or regulations - generally it’s the tax courts that decide when a taxpayer contests the issue that they don’t have enough activity to qualify). Also, at year-end, the need to recognize unrealized profit (bad?) or loss (not so bad?) for that year which reverses in the following year. The problem is not knowing in advance whether it will be of benefit in the effective year since the election must be included in the prior year’s return filed on or before the original due date or with a timely filed extension. There can be other traps.

Mike9241

sam992116Author

Level 6

Thanks I looked into MTM and best way to do is via entity. But in my state entity might be subject to Franchise State Tax and more compliance requirements both at Federal and State Level.