home office deduction exceeds business income

[jason1578]

TT shows that my home office deduction (~$200) exceeds my business income (~$100). Is this possible? I thought that allowable home office deduction for the current year is always adjusted to be less that business income for the current year. Am I doing something wrong?

[DaveF1006]

It depends. To clarify, is the (-$100) the final result after taking the home office deduction in consideration?

[jason1578]

Yes, this is correct. The (-$100) the final result after taking the home office deduction in consideration. There no other deductions.

[JohnB5677]

You cannot claim more than the gross income of your business in a tax year. For instance, if your gross income is $100, then you cannot deduct $200 as home office expense. So, your business income can have a deduction limit.

[jason1578]

It seems that there is a problem in TT calculations. My business income is $100 and according to TT my home office deduction is $200. Maybe I report my real estate tax in a wrong field. My real estate tax is ~$4,300, and I report it in the real estate tax field for each home office (I use one and my wife uses one). Should I report  the real estate tax in the excess real estate tax field for each home office? I tried that, but then TT shows that my property tax is 2x$4,300 (it takes the the excess real estate tax I reported for each home office and adds these). Could you advise how to report this situation correctly in TT?

[RobertB4444]

Since you have two home offices go ahead and divide the property tax in half and enter $2,150 for each home office in the 'excess real estate tax' field.  That should solve that.

@jason1578

[jason1578]

Thank you. Is it also possible to enter the full amount in the 'excess real estate tax' for one home office and zero for the second home office? Is it allowed?

[GeorgeM777]

While possible, it is not the preferred option.  To follow-up on the comments from @RobertB4444, both home offices are eligible for their respective share of the excess real estate tax deduction.  Thus, it makes sense to assign each office its fair share of the excess real estate tax. 

@jason1578

[gfc5]

My business shows a net income but Turbo tax is saying I do not qualify for the home office deduction due to the business not showing a profit. How do I fix this?

[DianeW777]

When I do a test of income and office expenses TurboTax Online provides a deduction up to the amount of income for the home office deduction.  The expense equals the income.

My firs suggestion is to clear your cache and cookies. It handles many issues that seem nonsensical on a regular basis. 

• Close your TurboTax return first.

Watch to be sure you are selecting 'all time' as example.  Do not use selections like 'last hour' for those browsers that give  you options.

• How to clear your cache

One that is completed, open your return to see if the home office deduction is allowed. If not you can send us a “diagnostic” file that has your “numbers” but not your personal information.  If you would like to do this, here are the instructions:  (feel free to @ my user name)

TurboTax Online:

Go to the black panel on the left side of your program 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. This will allow us to open a copy of your return without seeing any personal information.  

TurboTax CD/Download:

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 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. 

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. 

[Terry65]

I’m aware the IRS rules don’t allow an office-in-home deduction to generate a loss. For example a $3000 income - minus a $2000 expenses deduction = $1000 in income prior to an office-in-home deduction

In this instance any office-in-home deduction would be limited to $1000. But on my file it’s allowing a $1600 office-in-home deduction and creating a $600 loss. No loss should be permitted, I think there’s something wrong with the software or file and I have started a completely new return twice with the same results of a Sch C loss.

I’ve had no problems with the office-in-home deduction on the 2022 and 2021 returns.

[Terry65]

I’m aware the IRS rules don’t allow an office-in-home deduction to generate a loss. For example a $3000 income - minus a $2000 expenses deduction = $1000 in income prior to an office-in-home deduction

In this instance any office-in-home deduction would be limited to $1000. But on my file it’s allowing a $1600 office-in-home deduction and creating a $600 loss. No loss should be permitted, I think there’s something wrong with the software or file and I have started a completely new return twice with the same results of a Sch C loss.

I’ve had no problems with the office-in-home deduction on the 2022 and 2021 returns.

[DawnC]

Are you using the desktop?  Can you view your forms (Form 8829) in Forms Mode?   On your Schedule C, you have a positive amount on Line 30 and a negative amount (loss) on Line 31?   @Terry65  

[Terry65]

Yes, I am using desktop version with MAC OS 12.7.4.

I’ve viewed the return in forms mode Form 8829 and the Schedule C and the 1040.

On Schedule C

line 29 is positive the tentative profit of $1000

line 30 it shows positive $1600

Line 31 negative  amount, a loss of $600.

I tried sharing the file with an agent but she said she wasn’t able to see it.

[PatriciaV]

We have tested the Home Office Deduction with a net loss but are unable to reproduce the experience you have seen. It would be helpful to have a TurboTax ".tax2023" file to test this issue further.

If you would be willing to send us a “diagnostic” file that has your “numbers” but not your personal information, please follow these instructions: 

In TurboTax Desktop, open your return and go to Online in the TurboTax header. (On a Mac computer, choose File >> Share.)

1. Choose Send Tax File to Agent.
2. You will see a message explaining what the diagnostic copy is.  Click Send on this screen and wait for the Token number to appear. 
3. Reply to this thread with your Token number and tag (@) the Expert requesting the token from you. 
4. Please include any States that are part of your return. 

We will then be able to see the same experience you are having. If we are able to determine the cause, we'll reply here and provide you with a resolution.