Home office questions

[likesky1010]

I am self-employed as a software consultant. I have a small room as my consulting business home office. It is used for the business 100%.

This year, I added a new MTM Securities Trading business (my consulting activities are mainly in the evening). Now come to the home office and expense. I am thinking of not claiming any expense on the trader business separately. Because so many things are shared by these two business. Without the trader business, I still need them. Is there any issue with doing so?

Suppose I claim 50% of all the computers and home office expenses as the trader expenses. Is there any issue with reclaiming 100% of those expenses to the consulting businesses again when I quit the trader business later?

[CatinaT1]

I would divide the expenses between the 2 businesses as a percentage. For example, Software Consultant uses the space 80% of the time and the Securities Trading uses the space 20%, or whatever reasonable percentage makes sense.

This help article will provide you even more details on how to handle this situation in TurboTax: How do I allocate expenses for two home offices?

[likesky1010]

@CatinaT1  I am not sure how long the trader business will stay. If I allocate a portion to it, saying 30%, does the IRS allow me to reallocate the 30% to the consulting business if I give up the trader business later?

[Vanessa A · Accepted solution]

Yes. The usage is based on what you use for the year.  So if you use the home office in 2024 30% for trading and 70% for consulting, then that is the number for 2024.  If in 2025, you quit the trading business and use the home office and other items 10% for trading and 90% for consulting then you would just enter that as such on your 2025 return.

You are not locking yourself into using the same percentage each year.