My wife uses a home office for her business and made a profit last year. However, after completing the questions, it states that "because the net profit for her business was zero or less, which means she can't get the home office deduction. It then says that "your home office deduction of $x,xxx from 2020 will be carried over to 2022". Is the real reason due to carryover from 2020 exceeds the deduction limit so it can be carried over to next year?
Sorry. OSome 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 32b saying Some Investment is Not at Risk.
Wow, that was quick! I'll have to look at 32b since 1) the profit is high so it's not going negative 2) the office is exclusive and use is frequent every month.
UPDATE: I looked at box 32b and it's not checked.
So I'm concluding that the software message is wrong, since it does show a deduction for the home office for the business. I work in technology so I understand how these things can happen . . .
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