8829/SALT error message

[marc1974]

My apologies if this has been asked and answered, but I keep receiving an error message that line 11b on form 8829 is in error because SALT amounts for real estate tax deductions are limited to a combined total of $40,000.  I checked the Form 8829 for both our Schedule Cs, and the proportion of real estate taxes deducted is equal to the percentage of the home office space (33%), and the itemized deduction on Schedule A is 67% of the real estate taxes we paid last year.  Why am I receiving an error message then?  Why would the SALT cap have any impact on a Schedule C deduction?

[LenaH · Accepted solution]

If you have two Schedule C's and both have a home office deduction, you have to split the amount of property tax between the two businesses. You cannot enter the total amount of property tax paid for each home office entry. This would cause the total deduction to be greater than what was actually paid. This is likely why TurboTax is giving you an error. 

As an example, I completed a mock return and took the following steps:

1. For simplicity, I assumed my property taxes were $40,000, Schedule C (1) got a home office allocation of 33%, Schedule C (2) also got a home office allocation of 33%
2. First, I entered my home office deduction for Schedule C (1)
   • I elected to enter my actual expenses
   • For the amount of real estate taxes, I entered $20,000 (half of the $40,000 total).
   • I checked off the box next to Real estate taxes entered here were already entered on another home office.
3. Next, I entered my home office deduction for Schedule C (2)
   • Repeated the same steps as shown above with Schedule C (1)
4. Now, when looking at my return, my Schedule A shows a $26,680 property tax deduction on Line 5b, my Schedule C (1) shows an allocation of $6,660, and my Schedule C (2) shows an allocation of $6,660. These amount total the $40,000 in property tax. Any amount higher would be incorrect as I only paid the $40,000 in this example.

[marc1974]

Thank you for taking the time to walk through that!  Very much appreciated

I think I am still a little confused because we hit the $40K Salt cap, so we lost a portion of our real estate deduction from line 5D,  so the total amount that we were actually able to deduct from our taxes was less than what we paid in property taxes (but I guess that is just because we hit the SALT cap on line 5D, and can't use the excess property tax amount against our Schedule C businesses?)

[LenaH]

That is correct. If you hit the $40,000 limit on Schedule A, you cannot bypass it by re-characterizing personal property taxes as business expenses beyond the allowed home-office percentage. 

@marc1974 

[marc1974]

Makes sense - thanks again!

[slohtia]

SALT limit only applies to Sch A itemized deductions, it should not apply to form 8829.  You do not split the property tax if there are 2 schedule C, you apply the full property taxes on form 8829 and appropriate property tax deduction is used based on percentage use of the home office.  These allocated property tax deductions are then deducted from Schedule A.

Turbo tax does the calculations correctly where it reduces the amount of property tax claimed in Schedule C with form 8829 - use of home office.

However, there is a bug in turbo tax where it adds the total property taxes across all Schedule Cs.  That is wrong.  For example if you have total property tax of $20,000 and you have 3 sch Cs where each business  uses 5% of your home space.  You will use 20,000 as property tax for all 3 Sch Cs.  Turbotax will calculate $1000 as tax deduction for each Sch C.  The property tax on Sch A will now show $17000 ($20000 less $3000).

This is totally fine.   $3000 claim on property tax for business is allowed and your property tax deduction of $20,000 is still below SALT limit.

However, Turbo tax shows SALT error on form 8829 saying that you cannot claim more than $40000 due to SALT cap.  It thinks that you are claiming $60000 in property taxes.  It also calculates wrong Schedule A in auto mode where it shows $60000 in property taxes  in Schedule A worksheet rather than $20000.  You have to change than manually to $20000 for the sake of this example.

I hope Turbo Tax fixes this issue for form 8829 as it is currently showing error.

[slohtia]

I believe that is not correct.  33% is calculated on full house.  Not half house.  So, if there are 2 biz with 33% each then you are using 66% of the house.  In your example, it will be $44000 * 0.66 =  $29040.

But how you claim is 33% of $44000 in each business. So each Sch C will have $44000 * 0.33 = $14520.

Hope it makes sense.  Again, SALT is the limit for total property tax claimed in Sch A.  Your claim in Sch A will be reduced by $29040.

[marc1974]

Thanks - that’s what I originally thought.  Hopefully TurboTax can fix this?

[slohtia]

@LenaH 

Also, your response will be applicable if you are using the same portion of the house for 2 different Schedule C.  In that case the same 33% is used for both business.  So, overall use of home is 33%.  In this case, you will need to split the property tax for 2 Sch Cs.  So, the overall deduction is still 33% and you are not double dipping.  However, in @marc1974  case, there are 2 different areas.

May be this is the issue causing error in Turbo tax where it is adding all the property tax entered in form 8829 assuming all schedule C are using same part of the house.

In either case, the SALT does not apply for Sch C.

[marc1974]

This seems to track with my situation - the two businesses use two different parts of the home - so not sure why we would split the property tax in half before determining the deduction.  Would be interested in hearing @LenaH take on this

[slohtia]

Here is a post from TurboTax posted on Jan 16, 2026 confirming what I was trying to imply.

Can I claim the home office deduction for two or more businesses?

by TurboTax  491

Updated January 12, 2026 8:20 AM

Yes, you can claim the same home office space if you have more than one Schedule C business, but you can't deduct the office expenses multiple times. You'll have to split this expense between the businesses so that you’re only claiming the total square footage space once on your return.

If you work as an employee and for yourself, your home office can only support your self-employment and not your job as an employee in order to be deductible.

Here are a few examples of how you might choose to divide the space among your businesses:

• Divide it based on time

  • For example, if you use your entire office for each of your businesses, but use it for one business 60% of the time and another for 40% of the time, you could divide the square feet of the space 60/40.

• Divide it based on space

  • For example, if you have two businesses and one office measuring 100 square feet, you could enter 50 square feet for each business.

• Divide it based on a combination of time and space

  • For example, you might have special equipment for one business that uses 50% of your office space. You use the other 50% for both businesses, splitting your time equally. As a result, you would enter 75% of your home office square footage for your first business and 25% for your second business.

Whatever method you choose, when you start entering home office expenses, enter the full amounts you paid during the time you used the space for either office. Do the same for your other office.

It might seem like you're entering everything twice, but since you divided up the square footage earlier based on how you use it, all of the expenses for the total square footage will be accounted for on your tax return.

TurboTax will calculate the correct expense amounts for each office, and the total expense amount will be correct on your tax return.

If you have separate offices for each business, for example one in the house and the other in the garage, you'd enter the pertinent information (like square footage) for each office space when you enter the information for each business.