topic What should be done when you stop using a home office? in Deductions & credits

What should be done when you stop using a home office?

Contamine — Tue, 09 Mar 2021 20:17:39 GMT

My wife and I own a home and my wife has been taking the home office deduction related to her self-employment (sole proprietor business) for several years, which included depreciation deductions for our home and related renovation work. At the start of 2020 however, my wife took a full time job and essentially stopped using her home office for her self-employment. She didn't close down her self-employment business, but it is just a side job at this point and she really isn't using her home office anymore. How is this handled in TurboTax and is there anything we need to do regarding the depreciation?

Re: What should be done when you stop using a home office?

Mike9241 — Tue, 09 Mar 2021 20:29:14 GMT

you can't take the HO deduction unless the space is used exclusively for her office for the entire year. the first step is to make note of the depreciation taken in prior years. if you sell at a gain the depreciation must be recaptured even if it's 20 years down the road. but TT won't know about it. then if the was no s-e activity for the whole year just delete the schedule C.

Open or continue your return in TurboTax.
In the left menu, select Tax Tools and then Tools.
In the pop-up window Tool Center, choose Delete a form.
Select Delete next to the form/schedule/worksheet in the list and follow the instructions.

Re: What should be done when you stop using a home office?

Contamine — Tue, 09 Mar 2021 21:20:33 GMT

I am sorry but your response does not seem to answer my question. It is already clear to me that we shouldn't take the home office deduction if my wife stopped using the home office. Additionally, I stated that my wife did NOT close her self-employment business. She still has some income from that business so we don't wish to delete her Schedule C.

Your point about keeping records for our accumulated depreciation should we sell our home in the future is well taken. However, what I was asking was how we should handle the home office deduction in TurboTax if my wife stopped using her home office. It seems to me we could just not take the home office deduction anymore and be done with it but I want to be sure there isn't 1) some obligation to report the conversion of the office back to personal use and how this is done in TurboTax or 2) if there are tax rules that apply to the accumulated depreciation separate from those that apply if we sell the home in the future and if so how they should be handled in TurboTax.

Re: What should be done when you stop using a home office?

Critter-3 — Tue, 09 Mar 2021 21:25:35 GMT

In the OIH section you will indicate the asset (home) was taken out of service to stop the depreciation then keep a copy of the depreciation worksheet for future reference.

Re: What should be done when you stop using a home office?

Contamine — Tue, 09 Mar 2021 21:42:06 GMT

Thank you. Could you be more specific? What is the "OIH section"? Is there actually a checkbox or similar somewhere for taking a home office out of service?

Re: What should be done when you stop using a home office?

teampace — Mon, 12 Apr 2021 19:05:15 GMT

I have the same question. I'm no longer using my home office and want to understand what I need to indicate in Turbotax to denote this.

Re: What should be done when you stop using a home office?

PattiF — Mon, 12 Apr 2021 19:29:21 GMT

You would indicate in TurboTax that you do not have a home office. Here are some screenshots for this:

Re: What should be done when you stop using a home office?

cabe-franklin — Sun, 05 Mar 2023 18:38:32 GMT

One step closer to the ultimate answer, I believe OIH is "Office in Home".

With this in mind, I went into the Schedule C, then the Home office section of that, and I was able to note the date that I stopped using the office (after stepping through all the expense categories). That change filtered through to the percentage on Line 41 on the 8829, reducing the depreciation taken for the year.

Re: What should be done when you stop using a home office?

micheleaey — Fri, 17 Mar 2023 04:01:58 GMT

Where is the location on the 8829 that you can put in the date you stopped using the office?

I don't see it on the schedule C itself or the 8829. I am looking on the Asset Entry (Home) page which is under AMT Report and don't see where either

I don't want to claim my home office this year but want to be able to pick it back up in the future if I begin more self employment work. I don't want to keep accumulating depreciation that will need to be recaptured later. It will just keep being carried forward if I have no income and I don't want that carry forward alarming the IRS after a few years and don't want to pay recapture rates if we sell our home on depreciation carry forward I cant use.

I can't find the location to put the date stopped using.

I see the "Dispositions" area which I don't want to use.

I would appreciate some assistance

Re: What should be done when you stop using a home office?

micheleaey — Fri, 17 Mar 2023 04:10:58 GMT

I use the desktop version and when I go into the "Home Office Expense" area it takes me to "home office summary" which has the name of my office and I did to click on the Edit Button. When I do that it then takes me to the 2 questions to see if I can claim my office.

1. Do I use this part of my home exclusively......

2. Do I use this home office regularly...

If I say no on these when I normally say yes now for many years, it just tells me I cannot do the home office this year and try next year. However it is still using the depreciation and putting it on carry forward which is the reason I want to put my home office on hold for the year or may go into this year even, not sure yet. I don't want the depreciation accumulating when I have no income to offset it and I don't know if I will have any this year to continue forwarding depreciation and then need to recapture it in the future at a higher percentage than my current tax bracket. Makes no sense to me.

Can you please help me to stop this and basically put my office on a stop using for now and please let me know if I can turn it back on if I want or if I have to create a new office in the future and then keep track of my previous depreciation expense?

I hope I am making sense to you.

Thank you.

Re: What should be done when you stop using a home office?

AnnetteB6 — Fri, 17 Mar 2023 13:24:10 GMT

As you go through the Home Office section you should see some Home Office Assets that have been entered, including your home itself. The list of Home Office Assets will be shown after you have visited all of the other home office expense screens.

Click Edit beside the Asset that is your home, and look for the check box at the bottom of the screen titled 'Tell Us About Your Home'. The check box will indicate that you stopped using the home office for your business. Therefore, depreciation will only be calculated up to the date that you stopped using the home office.

Be sure to print the depreciation worksheet and keep it for your records to show how much depreciation has been taken over the years for your home office.

@micheleaey

Re: What should be done when you stop using a home office?

micheleaey — Tue, 21 Mar 2023 23:46:01 GMT

Hello, Thank you for replying. Today is first day I was able to get back into my taxes. What you have told me is not working. I have gone through the entire area of "My Office" and just clicked continue through all the expense locations in the area. Assets are not there. My assets for my business are under the Business Asset Summary which is a different location and my Home is not listed there. I cannot find my Home there at all. When I go into "view" I see AMT Report (page 1) and under it is Asset Entry (Home). It is the only location. When I go into Business Assets I don't find it like I said. So there is no questions for me to follow that help me to Shut Off the Office for this Year as not Used.

There are 57 Lines on this form and no where on this form can I say NO to the Home Office. The only this is Disposition. Complete only if you sold, abandoned, or otherwise disposed of the asset in 2022. Well that is not the area since I live in my home.

I am using the Desktop version of Home & Business.

Please help with this

Re: What should be done when you stop using a home office?

micheleaey — Wed, 22 Mar 2023 00:29:53 GMT

So I completed everything. I started over again with the tutorial assistance and this time it did pop up with the Asset of the Home. So odd. So it is asks:

Did you stop using this asset in 2022

Tell us if you stopped using tis item FOR BUSINESS PURPOSES in 2022 (These words I have capitalized are actually in Bold print)

Select YES if the item was:

-Sold

-Stolen

-Destroyed

-Converted to personal use

-Given away

-Taken out of service for any other reason

So this now is part of the Disposition area. When I say YES

It asks for the Date of Sale or Disposition. If I put a date as 1/1/2022 and my date Acquired is in 2000 (not putting more info here) then I click continue.

It is still giving me $14 of depreciation. Why?

So I back out of everything again. Back to Michele's Office and Edit

Lets get some info about Michele's home office

Does Michele Use part of this home Exclusively for this business or does it meet one of these exceptions. I put YES here because when I put NO it wont let me go any further in, it just says "Although Michele didnt qualify for it this year, Michele may be able to in 2023:

Doing it this way the Program continues to accumulate depreciation which is why I want to just shut it down for the year. I may make money next this year and want it again but so far I am not doing much yet this year. So that is why I don't want carry forwards if I then have no income this year, I don't want the IRS suspicious. Easier to just not use it.

So I hit continue and it takes me back to list of topics under the Business Tab. I cannot get to the Asset Home. So I now go back in again. First question to get by is Does Michele Have a Home Office. I have to put YES here to go forward. Then I have to answer YES to those 2 beginning questions are using the Office Exclusively and on a REGULAR BASIS just to go forward. Then Do any of these apply: This Office is Michele's PRINCIPAL PLACE of Business. When when I am working yes that is true. But not for last year, but have to check it off. If I put None of these I go back to the statement saying, Although Michele didn't qualify for it this year, Michele may be able to in 2023 and then I get nothing, and still accumulate more depreciation. So I have to say YES here just to move forward.

Aggravating so far.

Now, GOOD NEWS! MICHELE QUALIFIES for the home office deduction. Now we go through all the expenses of my home. I will pass through these after answering some more questions

Did I live in the same home all 12 months of 2022 - YES

Did I use this home office FOR ONLY THIS BUSINESS, an no other businesses? YES

DID I SHARE THIS HOME OFFICE....... NO

Then next screen check off: Michele OWNS THE HOME used for this home office

Screen of When did Michele start using this home office? Enter the actual date - FIRST DAY USED FOR BUSINESS.

Very ODD the date was there before and now is empty so I have to put it back in. Why? what happened

Going through now it is like I am starting the whole home office over again,

I put in a disposition date when I said I found it above to see what happens, but then I used the back button. Now if I wanted to change my mind of the office I don't see I have one, and am starting over. But I don't see the Dispostion under "VIEW" in the forms.

WHAT is going on?

Re: What should be done when you stop using a home office?

micheleaey — Wed, 22 Mar 2023 00:42:30 GMT

There is a 8829 with a red ! mark under View in my forms, but going through it now it is starting new. I cannot find a Disposition Report as if I disposed of the Office. I don't see anything for the office in the Depreciation Report. What HAPPENED. I just tested the step by step by answering YES I stopped using it on 1//1/2022 and see the $14.00 still there as I said, but now see absolutely nothing from that when hitting the BACK button to the beginning again to start over after see the $14, to see what happened. I have never had forms disappear on the Desktop versions I use after answering a question one way then going backwards to redo the questions a different way.

Re: What should be done when you stop using a home office?

micheleaey — Wed, 22 Mar 2023 00:51:23 GMT

PS not only did it not have the date I began using which was back in 2003 but it did not have the sqft of the office. All the info that transfers from previous year is gone after I answered the disposition question. It does not back out. It just disappeared as FINAL and nothing is there

Why did this happen?

When you say print your depreciation I have it from last year which then is the last year, but did not print what they had and don't know where that $14 came from but not using that number and don't know where a dispostion form is so what is going on and is this NORMAL? The IRS does not need a form saying I DISPOSED of my HOME OFFICE for 2022 and went to personal use?

I see no form, and I wanted to see what would happen if I did do it. I had not made up my mind totally but seems the program decided for me that I needed to dispose of my home office on the date I put in there just looking at how the program works. What kind of BS is this? I have always been able to work with this program on any aspect of the step by step, moving to VIEW and seeing where all the numbers move to and the various forms.

Now I cant find anything but a new 8829 in the Step by Step

I am HORRIFIED by this.

What form was supposed to be in the program for this so called "DISPOSTION" THAT I DONT SEE AND MAY HAVE NOT WANTED TO USE BUT NOW AM FORCED TO USE.

I wanted to see what the program would do if I said I used my Home Office for 6 months of the year which is a question in the step by step also, but now I don't have that choice because everything is gone

Re: What should be done when you stop using a home office?

PatriciaV — Wed, 22 Mar 2023 13:53:45 GMT

Yes, when you reported that you stopped using your home for business, TurboTax deleted the asset from your return. This is why AnnetteB6 advised you to keep your depreciation schedule. When you begin using your home again for business, you will add your residence as a home office asset using the information from the depreciation schedule (which includes accumulated depreciation).

Since the information has been removed, your only option is to start a new return by transferring your TurboTax return from last year. However, the result will be the same if you again report you stopped using your home for your business. This is a TurboTax limitation for assets converted to personal use.

Re: What should be done when you stop using a home office?

micheleaey — Fri, 24 Mar 2023 01:58:44 GMT

I see that she said to print the depreciation schedule, but she went into no detail of what would happen the moment I clicked continue as If I had no choice to go Back like everything else I can do in my desktop version. I think a bit more detail would have been appropriate.

So I just lost power in my house and I had to reopen my program and the last saved file I had was on the 16th so now I have the form back. I have to figure out what else I did in between, but I have it back to decide what to do. I still don't know the following:

1. When I hit continue and I said I stopped using the office on 1/1/22 why did it show I had $14.00? Why would it have any amount? I was trying to find that number going through the forms in the View and did not find it anywhere so not sure what happened to that in the disappearance of The Office on the 8892.

2. If I used My Office part of the year the program asks before the disposition question how many MONTHS did you use the office exclusively and regularly (or whatever those 2 words are, cannot see them at this moment). If I was to say for example 6 months, then what would happen in the disposition change to personal use? Would I get 6 months of my expenses forwarded to next year basically because I had no income this year, and then the Office would just disappear again?

2a. When I did say I disposed of the office to Personal Use, The program has no document/form on the disposition it just disappears? I fwant to make sure I am not missing a "disposition/return to personal Use IRS form (if there is one).

I don't want to test it by hitting continue and then find it disappears and have to start over again. This is definitely a flaw in the program.

3. When I do want to open a new office again, then where do I put the previous depreciation? When going through all the questions to open a new office I don't believe there is a specific question on "previous depreciation" in the Step by Step or is there? Or do I have to go into "View", and Override the form and put Previous Depreciation directly onto the Asset form?

I will wait to hear back from you on these questions before I decide to do anything further on the Office.

Thank You

Re: What should be done when you stop using a home office?

RobertB4444 — Fri, 24 Mar 2023 14:51:21 GMT

1. You told the system that you used your office for part of the year (one day). Depending on the depreciation convention that you used that means you got a month or a quarter of depreciation since you used it for part of that time period. That's where the $14 comes from.

2. The change to personal use happens whenever you tell the system that it happened. If you tell it "December 31 2021" then it should remove everything. If you decide to tell it six months it will take a half year of depreciation but since you have no income you still won't get the home office deduction. The home office deduction doesn't carry forward.

2a. There is no form to tell the IRS you stopped using the home office. Once it's off your return they get it.

3. There is a question in the step by step for entering prior depreciation when you enter a placed-in-service date that is older than the current year.

@micheleaey

Re: What should be done when you stop using a home office?

micheleaey — Mon, 27 Mar 2023 23:35:58 GMT

Thank you for this information. Since I lost my electricity and brought the return back with my saved copy I get to start again. I believe I used 1/1/22 as the last day used and then somehow the $14 was there. (I was going to play with numbers but never had that chance). I also could not find that $14 when I looked for it on any of the forms or in my Schedule C or on a asset/depreciation schedule. The step by step just came up with allowing that amount.

My depreciation is $328 so if I divide that by 12 months it is $27.33 so 1 month would be taken by the system as $27. The $14 would be half of that so is getting rid of my office as of 1/1/22 putting a half of a month into depreciation? If so then it seems it would be better to use 12/31/21? I claimed my home office for the entire year of 2021 so I don't want to alarm the IRS with stopping using it on the last day of the year.

Then again, turbo tax does not seem to create a form for the stopping the use of your office.

Please let me know which date I should use so I do not cause a problem for last year's return and do not accumulate any depreciation for this year.

I appreciate all your replies they have really been helpful that you have answered all my questions.

Re: What should be done when you stop using a home office?

micheleaey — Mon, 27 Mar 2023 23:53:21 GMT

One more question on Previous Depreciation:

There were 2 years - 2003 & 2004 where my husband has a business and we divided the space sqft in half and he claimed half on his schedule C and I the other half on my schedule C. I am adding his in also and coming up with the Total Depreciation taken over the years for our home and will use that total number in the "prior depreciation" area of the home. So it will not just be for my business but the system then can keep track of the full total amount that I would need if we ever sell the home.

Is that correct?