Form 8829 Depreciation Calculation Error?

[Chrisgmitchell]

We have used a small portion of our home for my wife's business for years.  From 2018 through 2023, Turbo Tax calculated the exact same depreciation value ($711) each year for line 42 of form 8829.  This was based on a basis of $210,000, usage of 13.2% of the home which yielded a deprecation percentage of 2.564% hence the $711.  We moved out of the house in September 2024 and so only used it for the first 9 months of the year.  However Turbo Tax is populating a value of $1,343 for line 42 and I cannot understand why.   All of the values for home basis, usage percentage and deprecation percentage are the same yet line 42 is nearly double what it normally would be.     

[KrisD15]

Line 42 on Form 8829 is a calculation. 

If the amount on your 2024 Form 8829 line 42 is different than the 2023 Form 8829, there has got to be some other number that changed as well. 

Can you compare the 2023 8829 to the 2024 8829 and see what other numbers changed?

Specifically lines 3 and 7 (they should be the same) and then lines 37 through 42.

I assume you can view the forms already. 

In TurboTax Desktop, switch to Forms top right, 

For Online use Tax Tools 

[Chrisgmitchell]

I realize its a calculation which is why it is odd.  To answer your questions on the differences between 2023 and 2024.....lines 3 through 7 (minor difference in row 5 as the IRS changed it from 8760 to 8784) are the same.  Lines 37 through 41 are the same.  As a result, Line 42 makes no sense.

[DianeW777]

It's important to check your entry because you should be indicating the property was removed from service in September, 2024. Based on your business cost basis calculation above, the rate for the year of removal would be 0.749% or a depreciation amount of $207 ($27,720 x 0.7490%). This is the nonresidential real property amount for 39 year property such as a home office.

The change in hours has to do with a 366 day year so 24 hours has been added to the total hours for the year. This has no consequence on your tax return as it is used only for child care.

If you don't find the entry that might need to be corrected please update here with any additional questions and we will help.

@Chrisgmitchell 

[Chrisgmitchell]

Just realized today that you had replied weeks ago.   I re-input some data and still don't think its calculating correctly.  Lines 37 through 40 are the same as the prior tax year.  Line 41 has now become 1.8162%.   This is approximately 70% of last year's value (2.5641%).   70% makes sense I think because Turbo Tax asked how much business was done at this address.   You would then think that line 42 would then calculate to $503.  Instead Turbo Tax now displays it as $1,135.   Not sure how it is calculating this.

[AnnetteB6]

To take a closer look at the situation, it would be very helpful to have a diagnostic copy of your tax file.  The diagnostic file will not contain personally identifiable information, only numbers related to your tax forms.  

If you would like to provide us with the diagnostic file, follow the instructions below and post the token number along with which version of TurboTax you are using and what states you are filing in a follow-up thread.  If possible, share a screenshot of the token number so that it will not be redacted.

Use these steps if you are using TurboTax Online:

• Sign in to your account and be sure you are in your tax return.
• Select Tax Tools in the menu to the left.
• Select Tools.
• Select Share my file with agent.
• A pop-up message will appear, select OK to send the sanitized diagnostic copy to us.
• Post the token number here. 

If you are using a CD/downloaded version of TurboTax, use these steps:

• Select Online at the top of the screen.
• Select Send Tax File to Agent.
• Click OK.
• Post the token number here.

@Chrisgmitchell 

[Chrisgmitchell]

I'm using the downloaded version for Windows of Turbo Tax Home & Business for both Federal and Wisconsin state.   Not sure what you mean by token number.    When I click ONLINE at the top of the screen there is no option that says "send tax file to agent".   Rather there are 5 options:  Check for updates, Turbo Tax Website,  View Installed Updates, Updater Preferences and Share Screen Code.     Please advise.

[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:  (Don't forget to give us the state)

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 Desktop for Windows
2. Select 'Send Tax File to Agent'* > Follow the prompts to reach the token number.
   • Enter your email used for TurboTax > Enter your code > Send
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.
   • *If using a MAC, go to the menu at the top of the screen, select Help, then, 'Send Tax File to Agent')

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. 

[Chrisgmitchell]

OK.   I see how to do it now and just did it.   Its Federal and Wisconsin State

1096145795-08413134

Thank you

[DianeW777 · Accepted solution]

Thank you for your token. The calculation for the home you moved out of is $503 which is the correct number ($27,720 x 1.819%) because it was the month removed from service (slight error in reading the chart in my previous calculation). It's very important to answer 'Yes' for the screen 'Did You Stop Using This Asset in 2024?'. 

The second home office, shows a purchase date of September, however it also has an incorrect date (2017)  for 'Date I started using it in this business'.  If I change the date to say, October 1st, then the depreciation is correct. 

Also be sure to enter the correct land portion of the home cost for the second house as well. My depreciation figure assumes the entire cost is only for the house. The depreciation for the second house is $451 calculated using the cost entered times the 13.20% and then the chart for October in the first year of 0.535%. This makes the combined depreciation for the home office of $954. Next year, for only the second home office it will be $2,166. These figure assume you did not include any land cost (when entering 'Cost of entire home' in the new home office.

The tax assessment from the city or county will provide the land and building breakdown so that you can arrive at the correct percentage for land.

@Chrisgmitchell 

[Chrisgmitchell]

I could provide a long explanation but I'll save it.  I think I got it all figured out now.  Many thanks