topic home office deduction exceeds business income in Deductions & credits

home office deduction exceeds business income

jason1578 — Mon, 23 Feb 2026 09:43:03 GMT

TT shows that my home office deduction (~$200) exceeds my business income (~$100). Is this possible? I thought that allowable home office deduction for the current year is always adjusted to be less that business income for the current year. Am I doing something wrong?

Re: home office deduction exceeds business income

DaveF1006 — Mon, 30 Jan 2023 20:46:31 GMT

It depends. To clarify, is the (-$100) the final result after taking the home office deduction in consideration?

Re: home office deduction exceeds business income

jason1578 — Tue, 31 Jan 2023 00:33:57 GMT

Yes, this is correct. The (-$100) the final result after taking the home office deduction in consideration. There no other deductions.

Re: home office deduction exceeds business income

JohnB5677 — Tue, 31 Jan 2023 16:56:16 GMT

You cannot claim more than the gross income of your business in a tax year. For instance, if your gross income is $100, then you cannot deduct $200 as home office expense. So, your business income can have a deduction limit.

Re: home office deduction exceeds business income

jason1578 — Tue, 31 Jan 2023 20:58:43 GMT

It seems that there is a problem in TT calculations. My business income is $100 and according to TT my home office deduction is $200. Maybe I report my real estate tax in a wrong field. My real estate tax is ~$4,300, and I report it in the real estate tax field for each home office (I use one and my wife uses one). Should I report the real estate tax in the excess real estate tax field for each home office? I tried that, but then TT shows that my property tax is 2x$4,300 (it takes the the excess real estate tax I reported for each home office and adds these). Could you advise how to report this situation correctly in TT?

Re: home office deduction exceeds business income

RobertB4444 — Tue, 31 Jan 2023 23:28:27 GMT

Since you have two home offices go ahead and divide the property tax in half and enter $2,150 for each home office in the 'excess real estate tax' field. That should solve that.

@jason1578

Re: home office deduction exceeds business income

jason1578 — Wed, 01 Feb 2023 22:24:18 GMT

Thank you. Is it also possible to enter the full amount in the 'excess real estate tax' for one home office and zero for the second home office? Is it allowed?

Re: home office deduction exceeds business income

GeorgeM777 — Wed, 01 Feb 2023 23:10:22 GMT

While possible, it is not the preferred option. To follow-up on the comments from @RobertB4444, both home offices are eligible for their respective share of the excess real estate tax deduction. Thus, it makes sense to assign each office its fair share of the excess real estate tax.

@jason1578

Re: home office deduction exceeds business income

gfc5 — Fri, 17 Mar 2023 16:16:19 GMT

My business shows a net income but Turbo tax is saying I do not qualify for the home office deduction due to the business not showing a profit. How do I fix this?

Re: home office deduction exceeds business income

DianeW777 — Fri, 17 Mar 2023 16:54:53 GMT

When I do a test of income and office expenses TurboTax Online provides a deduction up to the amount of income for the home office deduction. The expense equals the income.

My firs suggestion is to clear your cache and cookies. It handles many issues that seem nonsensical on a regular basis.

Close your TurboTax return first.

Watch to be sure you are selecting 'all time' as example. Do not use selections like 'last hour' for those browsers that give you options.

How to clear your cache

One that is completed, open your return to see if the home office deduction is allowed. If not you can send us a “diagnostic” file that has your “numbers” but not your personal information.  If you would like to do this, here are the instructions: (feel free to @ my user name)

TurboTax Online:

Go to the black panel on the left side of your program and select Tax Tools.

Then select Tools below Tax Tools.
A window will pop up which says Tools Center.
On this screen, select Share my file with Agent.
You will see a message explaining what the diagnostic copy is.  Click okay through this screen and then you will get a Token number.
Reply to this thread with your Token number. This will allow us to open a copy of your return without seeing any personal information.

TurboTax CD/Download:

If you like, you can send a copy of your return that will be scrubbed to eliminate your personal data by using these steps:

Click on Online in the top left menu of TurboTax CD/Download for Windows
Select 'Send Tax File to Agent'
Write down or send an image of your token number then place in this issue.
We can then review your exact scenario for a solution.
Please also tell us any states included in the return.

We will then be able to see exactly what you are seeing and we can determine what exactly is going on in your return and provide you with a resolution.

Re: home office deduction exceeds business income

Terry65 — Sat, 20 Apr 2024 18:53:50 GMT

I’m aware the IRS rules don’t allow an office-in-home deduction to generate a loss. For example a $3000 income - minus a $2000 expenses deduction = $1000 in income prior to an office-in-home deduction

In this instance any office-in-home deduction would be limited to $1000. But on my file it’s allowing a $1600 office-in-home deduction and creating a $600 loss. No loss should be permitted, I think there’s something wrong with the software or file and I have started a completely new return twice with the same results of a Sch C loss.

I’ve had no problems with the office-in-home deduction on the 2022 and 2021 returns.

Re: home office deduction exceeds business income

Terry65 — Sat, 20 Apr 2024 19:59:24 GMT

I’ve had no problems with the office-in-home deduction on the 2022 and 2021 returns.

Re: home office deduction exceeds business income

DawnC — Tue, 23 Apr 2024 00:47:56 GMT

Are you using the desktop? Can you view your forms (Form 8829) in Forms Mode? On your Schedule C, you have a positive amount on Line 30 and a negative amount (loss) on Line 31? @Terry65

Re: home office deduction exceeds business income

Terry65 — Wed, 24 Apr 2024 20:59:55 GMT

Yes, I am using desktop version with MAC OS 12.7.4.

I’ve viewed the return in forms mode Form 8829 and the Schedule C and the 1040.

On Schedule C

line 29 is positive the tentative profit of $1000

line 30 it shows positive $1600

Line 31 negative amount, a loss of $600.

I tried sharing the file with an agent but she said she wasn’t able to see it.

Re: home office deduction exceeds business income

PatriciaV — Thu, 25 Apr 2024 16:13:18 GMT

We have tested the Home Office Deduction with a net loss but are unable to reproduce the experience you have seen. It would be helpful to have a TurboTax ".tax2023" file to test this issue further.

If you would be willing to send us a “diagnostic” file that has your “numbers” but not your personal information, please follow these instructions:

In TurboTax Desktop, open your return and go to Online in the TurboTax header. (On a Mac computer, choose File >> Share.)

Choose Send Tax File to Agent.
You will see a message explaining what the diagnostic copy is.  Click Send on this screen and wait for the Token number to appear.
Reply to this thread with your Token number and tag (@) the Expert requesting the token from you.
Please include any States that are part of your return.

We will then be able to see the same experience you are having. If we are able to determine the cause, we'll reply here and provide you with a resolution.

Re: home office deduction exceeds business income

Terry65 — Fri, 26 Apr 2024 08:04:29 GMT

Here's the token : 1247162

The file contains state NY

Also on F8829 the mtg interest of 4931 is not carrying over to the deductible mortgage interest indirect column. I can see it tho on the smart worksheet.

I think of the total mtg int of 4931, 80% = 3945 should go on School A and 20% = 986 should be on F8829 line 10 indirect column.

It’s fine on the real estate tax and correctly subtracted the amount taken on the F8829 indirect column from the Sch A.

Thank you

Re: home office deduction exceeds business income

PatriciaV — Fri, 26 Apr 2024 13:15:09 GMT

We have reviewed the token file you provided. The mortgage interest did not flow to Form 8829 because it was not property entered under the Home Office topic for your Schedule C business. Because TurboTax is based on a step-by-step interview process, we recommend following those steps to enter information for your return.

When you edit your Home Office from the Business Summary page, continue to the page "Mortgage interest or points." Highlight the 1098 that you previously entered and click Edit. Review the entries, then click Done.

On the next page "Tell us about your home expenses," you manually entered the mortgage interest under Mortgage Insurance Premiums. This is why no mortgage interest appeared on Form 8829. TurboTax automatically enters the amount from the previous step on the Mortgage Interest line.

Delete the mortgage insurance premiums entry if it doesn't apply.

Continue through the screens to the page "Good News! You get a home office deduction." Note the amount is larger after correcting the entries.

As for the Home Office deduction creating a business loss, according to IRS Pub 587 Deduction Limit, your deduction for otherwise non-deductible expenses for the use of your home is limited to gross Income minus the business portion of expenses that you could deduct even if you didn't user your home for business (such as mortgage interest, real estate taxes, and casualty losses) and other business expenses not related to the home office.

In other words, the expenses you could deduct if you didn't have a home office are always deductible, even if this creates a business loss.

@Terry65

Re: home office deduction exceeds business income

AmeliesUncle — Tue, 30 Apr 2024 01:21:26 GMT

@Terry65 wrote:
I’m aware the IRS rules don’t allow an office-in-home deduction to generate a loss.

That's not necessarily true.

In some cases, Mortgage Interest, Real Estate tax and Casualty losses (line 9-11 of Form 8962) CAN create a loss. However, if you are using the Standard Deduction (not Itemizing on Schedule A), the mortgage interest and real estate tax should NOT be on lines 10 and 11 (they go on lines 16 and 17, where they can NOT create a loss).

Re: home office deduction exceeds business income

Terry65 — Fri, 03 May 2024 15:49:18 GMT

Thank you for your help. Your explanations and directions were very clear. I followed your directions and fixed my mistakes. I was able to resolve everything and your last line “In other words, the expenses you could deduct if you didn't have a home office are always deductible, even if this creates a business loss.” was especially concise and clear.

The link to Pub 587 instructions/worksheet was also very helpful. I saw in the instructions the reason for the allowable loss was the difference between itemizing on Such A or taking the standard deduction.