For the last 4 years, my self-employed wife did work at home, using part of our home. For the last 3 yrs, TurboTax has said we can't take the home office deduction. Why?

[joshuadoug]

The space where my wife works at home is used only for her business. I have asked an accountant and was told we should have qualified for this deduction. My wife works 60 hours a week and spends about 30 hours working in her home office.

[VolvoGirl]

Does she have a Net Profit or Loss on Schedule C?   Some expenses, such as home office or section 179 depreciation can only be used to reduce your schedule C taxable income to zero, and not to create a loss. Excess deductions for these carry over to the next year. And you have to answer yes to both questions about exclusive and regular use, not just one. The area of your home office must be used regularly and exclusively for business to deduct it.

Or you checked the box on Schedule C 32b saying Some Investment is Not at Risk.

[cindybejarano]

Your response to this post fit with the post I submitted last night and I have not received any response on my post. The one issue I have with it is the software is that for me on Premier 2024, the software is pulling Schedule C line 28 which is total expenses to the calculation worksheet and showing a loss and not line 29 which is tentative profit or loss. I am showing over $16,000 profit but the program states I can't take the home office deduction because of a net loss. Can you advise me?

[DianeW777]

If you would like to send us a “diagnostic” file that has your “numbers” but not your personal information it would help.  If you would like to do this, here are the instructions: 

TurboTax Online:

Open your return -Go to the menu panel on the left side of your return and select Tax Tools. 

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

TurboTax Desktop:

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

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

@cindybejarano 

[cindybejarano]

I sent the return as you suggested but I have not started the California return because I want the Federal to be correct before I proceed.

[cindybejarano]

The token number is 159500-37978077 and the state will be California when Federal is correct.

[DianeW777]

Thank you.  It seems the token number is not legible, would you mind sending it again?

@cindybejarano 

[cindybejarano]

The system seems to be making changes to my posting. I initially posted the token number and it edited out all but the last four and entered that it had removed the phone number. I look back now and there are numbers back in that post but not the complete token number. Here is the token number and my state is California but it has not been started.

Token number 15950021837978077

Thank you

[DoninGA]

@DianeW777 This is the token number that @cindybejarano  originally posted -

The token number is 159500-37978077

[DianeW777]

The following questions were answered and the results provided the simplified home office deduction using the correct self employment income on Form 8929 and carried to Schedule C. Be sure to answer the questions truthfully when you walk through the questions.

1. Open your TurboTax return > Search Schedule C > Click the Jump to... link
2. Edit beside your business > scroll to Home Office Expenses > Update > Edit beside the office
3. Yes to the two questions on the next screen - Continue  
   1. Does X use part of this home exclusively...
   2. Does X use the home office regularly
4. Select 'This home office is X's principal place of business > Continue 'Good News! > Continue
5. Name of Home Office > Continue > Tell us more - I selected you lived there 12 months in 2024 > Continue
6. We need a little more info > Yes X used this home office only for business X and No, it was not shared > Continue
7. I selected X owns the home used for this home office > Not a daycare > Continue
8. Enter the first day used as a business (original date) > I selected 12 months used for business > Continue
9. I selected Yes, Does the space store inventory or product > Continue
10. You entered the square feet on the next screen > Continue > Business conducted entered 100% > Continue
11. How did X enter the home office deduction  > Simplified deduction  method selected > Continue
12. Selected I'll take the simplified deduction > Continue > No their were no home office expenses from a prior year > Continue
13. Good News! Home Office Deduction of $600.

This should allow the correct deduction on your Schedule C and Form 8929.

                          

@cindybejarano

[cindybejarano]

Thank you for this detailed list. My program does not have steps 3 through 6 or 9. Those questions do not come up. I do have a box to check that says X does all this business from home. I also have a question to answer that asks if there is any home office expense from prior years that was not deducted. So I still am not getting the home office deduction and the number showing the loss is the total expenses and not the tentative profit.

[DianeW777]

Possibly it could depend on the answers you initially provided. Follow the information below, then If you continue to experience a difference, you may want to delete the home office, continue through the section to the end.  Add it back to your return.

The following instructions are answered in TurboTax Online:

1. Was this home office used for work only and nothing else? - Yes
2. Did you regularly use this home office?  - Yes
3. Was this home office the primary place where you work? - Yes
4. Based on this info, you qualify for the home office deduction.
5. When did you start using this home office for work? - Original date
6. In 2024, how many months did you use this office at least 15 days? 12 months
7. Percentage of work done in this home office - 100
8. Continue to see the home office simplified method.
9. No prior year deductions that were not used.  $600 is the home office deduction.

Again, it's important to answer the questions based on your specific situation.  The answer above in my example provide the deduction using the simplified method.

@cindybejarano 

[cindybejarano]

I am not using Turbo Tax online. I am using the program that I downloaded. Should I switch to Turbo Tax online

[cindybejarano]

The questions that you are showing are not coming up in my program

[cindybejarano]

Let me see what happens if I let the program guide me through everything instead of choosing what I work on and see if those questions come up