HOME OFFICE LOSS

[eemr19841]

I received a 1099k  for around $17k and after my operating expenses it shows a loss of  around $28k. Once i take the home office deduction of around  $10k it increases the loss to around $38k and carries over to offset part of my wife's w2 income and royalty income. I read that the home office loss is limited but in this case it is not. Is there something wrong? Please any suggestions or advice. Thank you.

[JotikaT2]

The home office deduction is typically limited to the percentage of your home that is directly used for your home office.  The 1099-K form is used to report payments from credit cards or payment apps.  It is used to report taxable income that should be reported on your tax return.  

Assuming you have self-employment income, the payments reported on your 1099-K should be reported as part of your Schedule C business.  Please see this link for directions on how this form should be entered in TurboTax to make sure you have entered it in the correct area of the program.  

On your federal return, a home office deduction can only be used to offset your business income. It cannot be used to offset your W-2 income.  Unreimbursed employee expenses and home office deductions are not deductible on federal income taxes unless you meet certain criteria as outlined here.  They are potentially still deductible on your state return.

Make sure you are only calculating the home office based upon the area of your home that is used regularly and exclusively as your home office and is your principal place of work.  Any home expenses claimed can only be claimed based upon the percentage of your office space as compared to the entire square footage of your home.  I recommend reviewing your input to ensure you are only deducting the applicable percentage of expenses.  Please see the home office deduction tips for more details on how to compute your applicable home office percentage use based upon your situation.