home office and living abroad temporarily

[slara22]

Spouse is self-employed and has a home office. Each year, we take a home office deduction and depreciate it. The amount we end up deducting is minimal. 

Between Aug. & July 2022, we are traveling abroad. The home office was used between Jan. & July, 2021. It was not used between Aug. & Dec. 2021. My self-employed spouse continued to work remotely, but without a home office as we do not have a fixed address abroad. We will use the home office again when we return in 2022.

My main question:

Would it be possible NOT to take the home office deduction in 2021 and 2022 given it is minimal anyway? Or, should we take the home office deduction for 7 months in 2021 and then for the final months of 2022 again? In either case, should we “retire” the home office from use in 2021 and then bring it back in 2022? 

We also are renting our home while we are abroad, so I am dividing all expenses between home office months and rental months. This has brought about several other questions while working on Turbo Tax. So I’m just wondering whether it would be simpler and more convenient NOT to take the home office credit these 2 years. 

Is there any reason for or against taking the home office credit in 2021?

Thanks so much, in advance, for your help.

[JohnW152]

No, you don’t have to claim the home office deductions if you don’t want to, but there’s no reason you shouldn’t.  

And, anyway, you can only deduct home office expenses for the period of time that your spouse was actually using the home office, not the entire rest of the year if she wasn’t using it then.

You can take the home office deduction for 7 months in 2021, as you suggest, and then claim it again for the final months of 2022.  If that matches her period of use, that’s how it’s supposed to work. 

There’s not really a right or wrong answer for you, but there’s not really any need to “retire” the home office deduction.  If the benefits for you claiming the deductions are minimal, just make your own quick cost-benefit analysis to see if it’s worth your time.  

Please see the TurboTax Help articles Can I take the home office deduction? and What does "Regular and Exclusive Use" mean? 

for additional information.

[slara22]

Thank you so much! Glad to know it can go either way.  I have a couple clarifying questions, assuming that I take the HO deduction and there is no need to “retire” it from use (this makes sense as we will be using it in 2022 again):

In the business description, I know I would continue to mark the HO as used for 7 months in 2021. But how about in the HO Asset section? There is a box stating “I stopped using my HO during 2021…because I sold my home…or no longer use the office for this business” along with a potential date in which I stopped using it. If I am not retiring the HO from use, I am assuming this box should be left unchecked.  I’m testing this in TurboTax:

If I state that we stopped using the HO, I am asked for a date in which its use was stopped. Then the depreciation is lower because it corresponds to 7 months. If instead I just don’t mark the box (so I don’t retire/sell my HO), the depreciation is the same as it is every year.  Does the depreciation need to correspond to the months in which the office was used? 

Last–Would it then still work to report the same property as a rental between Aug-Dec? 

Thanks so much in advance!

[AnnetteB6]

If you are going to claim the home office for 2021, then you will need to mark the box showing that you stopped using it for the last five months of the year.  That is the only way for the depreciation to be correct for the home office.  It does need to be calculated only for the period of time that it was used as a home office and not the whole year.

You will then be able to depreciate the whole home for August through December during the time it was a rental property without duplicating any depreciation and claiming too much without realizing it.

@slara22

[slara22]

Thank you so much, Annette! This is very helpful!