TurboTax does not allow home office deduction ...

[RichLeja1]

I am having the same problem.  Unfortuantely, these steps did not work.  Any time frame on a fix for this issue?

[EdwardinCO]

That's odd.  I just did a friend's tax using my TurboTax "Basic" "desktop" (so called) program, and the issue was fixed -- this time the interview actually ASKED for the percentage of the business activity that was performed in the home office.

Have you updated your program recently?

[MrMike762]

Same problem here, only discovered it when comparing my 2024 with 2023.

Im never asked what % of my business is used at the home office.  Only how many months did I work 50% or more at home.

Had to use the forms mode to add the % of home office used in business

Was not triggered in the review.  My software is up to date.

This would have cost me a few hundred less of a refund

Absolutely insane, that on the night before tax day, this isn't fixed.    Really makes me lose faith in this software for next year

[RichLeja1]

My issue is that the software is showing the Gross Income limit as a negative number???

I saw other posts that said the software was using the wrong data source and a patch was pending.  I hope it gets fixed soon.

[AnnetteB6]

The percent of business use of the home office is missing from the calculation and therefore the result is that the calculation shows a loss for your business.

When you go through the Federal Review of your return, this error should be flagged and you can enter the amount on that review screen.  The amount to enter is the percentage of time that you spend in your home office making money for your business.  If all of your time is spent working in your home office for your business, then enter 100%.

You can also make the correction to the calculation using Forms Mode.  Use these steps:

• Click Forms on the top row of TurboTax.
• Go to Form 8829.
• Scroll to the section titled Line 8 Calculation Smart Worksheet and enter your percent of business use of the home office on line B.
• Click Step-by-Step at the top of the screen to go back to the input screens.

@RichLeja1 

[RichLeja1]

Annette,

The % of business use is input in this sheet (both in step-by-step and forms):

Yet, the Limit is still showing as Negative.  

This has got to be an error.....

[AnnetteB6]

It is not necessarily an error since the percent of business use for the home office is only 20%.  

Here is how the calculation works:

If the number entered for business use of the home office is less than 100%, then the calculation could take your profit to a negative number when using the simplified home office calculation.  If this happens, then the deduction is disallowed.

Here are the details about how the Simplified Home Office deduction works, and what could be causing the situation in your return.

For any home office deduction (actual expenses or simplified), the home office deduction is not allowed to take a Schedule C bottom line from a positive profit to a loss.  Therefore, before the home office deduction is calculated, the tentative profit or loss of the business is considered.  If the number is a loss, then no simplified home office deduction is allowed.  However, even with a loss, an actual expense home office deduction can be calculated and carried over to the next year.  Carryover is only possible when using the actual expenses, not the simplified method.  

The profit/loss number that is used to decide whether the home office expense is allowed comes from Schedule C line 7 minus Schedule C line 28.  If the result is positive, then that is the first step to get the simplified home office deduction.  

If the Business Conducted in the Home Office percentage is any number less than 100%, then the amount on Schedule C line 7 is adjusted by that percentage before the expenses are subtracted.  So even with what you expect to be a positive profit situation, the percentage of business conducted in the home office can drop the income to a level where the profit is negative instead of positive.  This means that the simplified home office method is not allowed.  Again, using the actual expense method can work, but the home office expense is carried over to a future year.  

@RichLeja1 

[RichLeja1]

Annette,

Thank you for the detailed response!  This makes sense.  I am not sure why the program does not give the explanation you gave below for this section.  The feedback is very limited and doesn't help at all.  On the tax side, I don't agree with the tax logic that you need to have a very high Use % to get any deduction at all.  My wife spends many hours at home scheduling lessons and such.  But, she spends more time giving lessons.  So, it would be hard to get above 50%.   I don't think the simplied method is working very well if it isn't capturing this.  I agree that the actual method is way too complicated.  Oh well, there is nothing that we can do about this.  Thanks again for your very detailed explanation!!