Home Office Depreciation & Carry Over -Schedule E / Partner K-1

[KMJK]

Hello,

I use Schedule E for my rentals, plus have K-1s from a partnership that I report. I qualify for Real Estate Professional, no W2 job, etc.  I have carryover of unallowed expenses from previous years for my home office when a CPA was doing my taxes and now what I manually calculated using the IRS form. My home office was also being depreciated. Where in Turbo Tax Home and Business Or Turbo Tax Business do I depreciate my Home Office?

Also, the only mention of Home Office I see(other than schedule C, which I do not use) is through my K-1 on a box for "Misc Supplemental Expenses". The hyperlink for "How do I enter Home Office" opens and the verbiage states to use the IRS form to "figure out the amt and enter it in the box". This doesn't seem right  or very helpful. Its a misc box that you also can enter other random things in like uniform costs. Its not unique to home office.  I should have a depreciation schedule and also a record for all the unallowed carry over I have accumulated and what should carry over to next year.  I should have the form that I filled out by pencil in Turbo Tax to account for these expenses.

What and Where am I missing this????

Thanks!!

[CatinaT1]

IRS Form 8829 (Expenses for business use of  home) is used only for a Schedule C (Sole Proprietors).

When you enter  your Partnership K1, there is a box on the Describe the Partnership screen that says: I am required to pay supplemental business expenses on behalf of this partnership/LLC for which I am not reimbursed. 

You will reach a screen for Miscellaneous Supplemental Expenses. This is where you enter your Home Office Information., but you will have to figure the amount manually.  (There is a How do I enter Home Office Expenses for my partnership link). The final number here will be transferred to your Schedule E, Line 28 with the description UPE.

If you have carryover expenses from previous years that were disallowed due to income limits, you enter them manually in the K-1 section as well. You will need to check the box for passive active losses carried over, back on the Describe the Partnership screen where you checked the supplemental business expenses box.

Also, the IRS is very strict that your Partnership Agreement must specifically require you to pay supplemental expenses personally. If the agreement is silent, the IRS may disallow the UPE deduction on an audit.

[KMJK]

OK, thank you, So I was looking at the right spot then.

What is the reasoning for Turbo Tax to not have the Business Use for Home worksheet for those of us that do not file Schedule C? Its a real pain having to manually calculate this, and when you forget to add something or need to change something, then you gotta go back and erase, refigure, etc. Such a pain and time waster to have to do this. Is it because the form / similar form exists in schedule C and they can't duplicate forms in the software?

Thanks

[CatinaT1]

Business use of home for Partners, is not calculated using Form 8829. Per the IRS instructions they provide a worksheet to calculate this.

[KMJK]

Ok, thanks for all the info, just bizarre the IRS wants you to use pencil and paper while using software. I had to break out my pencil sharpener of years past. 

I'm following my previous CPA doing this so can see his pattern and how he filled out his past years worksheets. Just to make sure I am clear though with the way Turbo Tax Home and Business wants it entered...... 

Using round numbers for simplicity........On the Worksheet to figure the Deduction for Business Use of Home:

Line 41 is $7000 and Line 42 is $500.

Line 42 seems to be the Depreciation. I assume $500 is put in the "Misc Supplemental Expenses" box. Is this correct? Is it ok to name it "Depreciation - Business Use of Home"?

 I'm super confused on Line 41 for $7000. This is 5 yrs (including this tax year) of carryover. Since you mention that I needed to check "I have passive activity losses", would -$7000 (info says to enter as negative number) be entered on the pages "Report Carryovers - Regular Tax" & "Report AMT Carryovers" in the "Unreimbursed Expenses" boxes? I'm not confident that that is the same thing as "Carryover of Unallowed Expenses to Next Year" on the worksheet, is my concern.  

Would I enter -$7000 in the next page "Any Qualified Business Income (QBI) Carryovers" in the box  "QBI suspended loss - passive"? (Since we do qualify as a business or trade). Then the next page I would enter the loss amts by year. 

If neither are right, let me know where I need to put it please. I just want to make sure I'm putting these amts in the CORRECT space. My understanding of the unallowed expenses on line 41 is that it just needs a "parking place" in order to keep track of it until a year that it could be used. 

Thanks!

[RobertB4444]

You are mostly correct in that the numbers need to be parked so that they can be carried forward.  Those are the exact parking spaces that I would use if I were entering the numbers in your place so it sounds as though you are handling the situation correctly.

@KMJK 

[KMJK]

Hi, Thanks for the response.

So you would put the carryover in all the boxes I mentioned?  the 2 "Unreimbursed Expenses" boxes  AND the QBI section?

Is "Unreimbursed Expenses" the same as "Carryover of unallowed expenses to Next year" in Turbo Tax?

Thanks

[RobertB4444]

Unreimbursed expenses are the same as unallowed expenses in this case.  

And business suspended losses are a fine place to keep track of these losses so that you can take them when you sell the home.  But only the depreciation portion can go there.