For the home office deduction, what is the percentage of the gross income from line 7 of Schedule C that can be attributed to the business use of my home office.

[skononov]

I do radon testing and mitigation.  In my home office, I do all of my administrative work (email bids and proposals and do all the bookkeeping) and make all the phone calls to obtain my sales.  The labor of installing the radon mitigation system is done at my customers' homes.  Since all the sales are obtained in my office, do I use 100% or do I have to reduce the percentage used since the labor is done elsewhere?

[DavidD66]

The home office deduction isn't based on your income, or where you earn it (e.g. out if the field).  If you qualify for the deduction, you qualify for the deduction.  You then calculate it.  There are two methods, the Actual and the Simplified.  The Simplified requires that you have net income from your business to take a deduction.  If you don't you can't carry it forward - you lose it.  With the actual method, you can't take the deduction in a year you don't have a profit, but you can the unused deduction forward until you do.  For more information see:

The Home Office Deduction

[skononov]

Thank you for your response, however you are referencing the qualification.  I am talking about the question that pertains to line 8 on form 8829.  Turbo tax asks me to enter the percentage of time I spend conducting business in the home office.  It then gives an example of a plumber saying this:

You are a professional plumber. You spend 40% of your time in your home office ordering supplies and parts, making phone calls, meeting with contractors, and performing administrative work. You spend the other 60% working at your customers' homes or businesses, working on their plumbing. Because you have other business locations for earning money, you enter 40 for the percentage of business income earned from your home office.

I earn money by doing my radon mitigations at the customer's home, but the sale is obtained when I am on the phone in my home office.

[skononov]

In the past I have put 50% for the time spent in the home office, but many years it then has not given me a deduction and I have a huge carry over.  A friend who is a CPA said that I should be using 100% of my gross income from line 7 of schedule C since I do not have an office elsewhere.  I am now wondering if I should use 100% on my current return and amend the last three years of my returns using that figure.  The amount of the home office deduction when using 100% vs. 50% goes from 0 to $12,000.  Huge difference.

[DavidD66]

I agree with your CPA friend.  I would use 100%.