What should be done when you stop using a home office?

[PatriciaV]

Yes, when you reported that you stopped using your home for business, TurboTax deleted the asset from your return. This is why AnnetteB6 advised you to keep your depreciation schedule. When you begin using your home again for business, you will add your residence as a home office asset using the information from the depreciation schedule (which includes accumulated depreciation).

Since the information has been removed, your only option is to start a new return by transferring your TurboTax return from last year. However, the result will be the same if you again report you stopped using your home for your business. This is a TurboTax limitation for assets converted to personal use.

[micheleaey]

I see that she said to print the depreciation schedule, but she went into no detail of what would happen the moment I clicked continue as If I had no choice to go Back like everything else I can do in my desktop version.  I think a bit more detail would have been appropriate.

So I just lost power in my house and I had to reopen my program and the last saved file I had was on the 16th so now I have the form back.  I have to figure out what else I did in between, but I have it back to decide what to do.  I still don't know the following:

1.  When I hit continue and I said I stopped using the office on 1/1/22 why did it show I had $14.00?  Why would it have any amount?  I was trying to find that number going through the forms in the View and did not find it anywhere so not sure what happened to that in the disappearance of The Office on the 8892.

2.  If I used My Office part of the year the program asks before the disposition question how many MONTHS did you use the office exclusively and regularly (or whatever those 2 words are, cannot see them at this moment).  If I was to say for example 6 months, then what would happen in the disposition change to personal use?  Would I get 6 months of my expenses forwarded to next year basically because I had no income this year, and then the Office would just disappear again?

2a. When I did say I disposed of the office to Personal Use, The program has no document/form on the disposition it just disappears?  I fwant to make sure I am not missing a "disposition/return to personal Use IRS form (if there is one).

I don't want to test it by hitting continue and then find it disappears and have to start over again. This is definitely a flaw in the program.  

3.  When I do want to open a new office again, then where do I put the previous depreciation?  When going through all the questions to open a new office I don't believe there is a specific question on "previous depreciation" in the Step by Step or is there?  Or do I have to go into "View", and Override the form and put Previous Depreciation directly onto the Asset form?

I will wait to hear back from you on these questions before I decide to do anything further on the Office.  

Thank You

[RobertB4444]

1. You told the system that you used your office for part of the year (one day).  Depending on the depreciation convention that you used that means you got a month or a quarter of depreciation since you used it for part of that time period.  That's where the $14 comes from.

2. The change to personal use happens whenever you tell the system that it happened.  If you tell it "December 31 2021" then it should remove everything.  If you decide to tell it six months it will take a half year of depreciation but since you have no income you still won't get the home office deduction.  The home office deduction doesn't carry forward.

2a. There is no form to tell the IRS you stopped using the home office.  Once it's off your return they get it.

3.  There is a question in the step by step for entering prior depreciation when you enter a placed-in-service date that is older than the current year.

@micheleaey 

[micheleaey]

Thank you for this information.  Since I lost my electricity and brought the return back with my saved copy I get to start again.  I believe I used 1/1/22 as the last day used and then somehow the $14 was there.  (I was going to play with numbers but never had that chance). I also could not find that $14 when I looked for it on any of the forms or in my Schedule C or on a asset/depreciation schedule.  The step by step just came up with allowing that amount. 

My depreciation is $328 so if I divide that by 12 months it is $27.33 so 1 month would be taken by the system as $27.  The $14 would be half of that so is getting rid of my office as of 1/1/22 putting a half of a month into depreciation?  If so then it seems it would be better to use 12/31/21?  I claimed my home office for the entire year of 2021 so I don't want to alarm the IRS with stopping using it on the last day of the year.  

Then again, turbo tax does not seem to create a form for the stopping the use of your office.  

Please let me know which date I should use so I do not cause a problem for last year's return and do not accumulate any depreciation for this year.

I appreciate all your replies they have really been helpful that you have answered all my questions.

[micheleaey]

One more question on Previous Depreciation:

There were 2 years - 2003 & 2004 where my husband has a business and we divided the space sqft in half and he claimed half on his schedule C and I the other half on my schedule C.  I am adding his in also and coming up with the Total Depreciation taken over the years for our home and will use that total number in the "prior depreciation" area of the home.  So it will not just be for my business but the system then can keep track of the full total amount that I would need if we ever sell the home.

Is that correct?

[ThomasM125]

Yes, you are correct in that the total depreciation would be used if you need to recapture any depreciation when you sell your home. If the home office consisted of a room in your home, as opposed to a structure not attached to your home, you would only need to recapture for capital gain tax purposes depreciation taken on the home office if you qualified for the $250,000 (single filer) or $500,000 (filing married-joint) exemption for sale of a primary residence.

[micheleaey]

This "room" is in our owner occupied home that if we sold it now would qualify for the $500,000 exclusion (married).  Who knows how long we stay in this house and if we put it as a rental property rather than sell it.  We have lived her now for 23 years.   We currently have a rental home also and been depreciation it for years now, and if we sell that home would have "recapture" I would think also?  If we move to that home for a few years, and I add a home office again, then the rental property that has been accumulating depreciation would also accumulate home office depreciation.  Then the property I currently live in would become a rental and would have entire home depreciation.  Seems a bit complicated on this depreciation. 

I am just complicating things at this time.  But as long as I am living here then I will just put the total "prior depreciation" into the 8829 if I create another home office when I have income.  That will accumulate for me one way or another so I can keep track of it all. 

Thank you for your reply and confirmation

[AllyR]

@micheleaey  I've been following your posts because I also need to stop using a home office in 2022 and have the joy of figuring out the sale of the home in 2023 and recapturing depreciation. Just a tip that I have found useful when trying various things to see if they work. Once you are at a point in your return where nearly everything is entered correctly (except the item in question), save the file and then exit out of TT. Then what I do is open the file again and do some "what if" scenarios where I can enter numbers and answer questions to see what happens. I don't have to worry about messing everything up because once I figure out what needs to be done, I exit TT, but DON'T SAVE the file this time. Then you can reopen it where you had left off when everything was correct and then finish doing what you just experimented before finally saving it.

I'm having an issue with my home office called Bottineau Studio from past years. When I transfer the return from last year, I checked and it is there but then when I go to the personal info screen for the overall tax return to change the address (my brother moved thus a new address entered), I find that my Bottineau Studio home office is no longer there and is replaced by a name with their new address. None of the square footage is there nor the assets. And that office wasn't even at their primary home but a second home so why would it replace the name with the new address? From what I read in the answers to your questions, I'm not going to worry about it because I didn't use the home office in 2022, nothing is being reported on it in the forms view and I have the depreciation info from last year's return. But I completely agree that this home office entry is quite a nightmare. I wish TT would have better step-by-step instructions for our situations! 

[micheleaey]

Hi Ally, sorry I did not reply until today.  

What you are saying about the saving the file, closing TT and then reopening to make what if's makes sense.  I have always been able to play with the numbers on all the other forms without doing this and not lose anything so was shocked when I totally lost the office after clicking "continue" and not being able to click "back" and get it back.  I know what the rep said about saving the depreciation schedule, but I did not realize it would be gone in that way.  I had lost my electricity so an immediate close of TT and my computer and so when I reopened TT it said there was a problem and they looked for a return to open.  It found the one I saved which was before I made the entry to delete the office.  I opened that and thought my office was back but no it wasn't so it much not have saved prior to my changes.  

So this is the first time I have had this happen trying "what if" scenario's.  Last year I was going through my assets and realized that I could get rid of old assets that I stopped using (basically they no longer worked and need replacement) and had replaced.  Never knew what to do so I did that and ended up with a Form 4797.  I was looking for something similar in the case of removing the office but nothing at all which was so confusing.  It just disappears.  

Now when I try to go through the step by step under the home office it just has my home address in the name and so that is where I can enter a new name and have to start all over again entering all the data.  I won't do it this year but may next year if I have income. 

I had been using my office from 2003, so I have all my tax returns on my computer and I went back to all of them and documented the total depreciation taken.  I have it all documented now and it does add up to what the depreciation was in my 2021 return under prior depreciation then add what was taken in 2021 and I have the amount forwarded to 2022 what should have been prior depreciation.  

There should be some Warning in the Step by Step that whatever is done is Final before hitting Continue.  This is one area you cannot go back and re-answer a different way.  

Note to TT if you are looking at this.

[micheleaey]

@AllyR  I replied a moment ago to your reply to me but it did not show up going to you after I hit "post" so I am not sure if you will get it and am trying another way as you did with me using the @ sign and my name.  I am pasting my last reply to you again here (sorry TT community that this is a duplicate).  I am just learning how to do this so don't know what works and what does not work to get back to the person I am speaking to. Let me know if you receive both then I will know next time just hitting reply works or if this is the way you receive it using the @ sign with your name.  I will then know for next time. 

Hi Ally, sorry I did not reply until today.  

What you are saying about the saving the file, closing TT and then reopening to make what if's makes sense.  I have always been able to play with the numbers on all the other forms without doing this and not lose anything so was shocked when I totally lost the office after clicking "continue" and not being able to click "back" and get it back.  I know what the rep said about saving the depreciation schedule, but I did not realize it would be gone in that way.  I had lost my electricity so an immediate close of TT and my computer and so when I reopened TT it said there was a problem and they looked for a return to open.  It found the one I saved which was before I made the entry to delete the office.  I opened that and thought my office was back but no it wasn't so it much not have saved prior to my changes.  

So this is the first time I have had this happen trying "what if" scenario's.  Last year I was going through my assets and realized that I could get rid of old assets that I stopped using (basically they no longer worked and need replacement) and had replaced.  Never knew what to do so I did that and ended up with a Form 4797.  I was looking for something similar in the case of removing the office but nothing at all which was so confusing.  It just disappears.  

Now when I try to go through the step by step under the home office it just has my home address in the name and so that is where I can enter a new name and have to start all over again entering all the data.  I won't do it this year but may next year if I have income. 

I had been using my office from 2003, so I have all my tax returns on my computer and I went back to all of them and documented the total depreciation taken.  I have it all documented now and it does add up to what the depreciation was in my 2021 return under prior depreciation then add what was taken in 2021 and I have the amount forwarded to 2022 what should have been prior depreciation.  

There should be some Warning in the Step by Step that whatever is done is Final before hitting Continue.  This is one area you cannot go back and re-answer a different way.  

Note to TT if you are looking at this.

[AllyR]

@micheleaeyBoth of your messages posted but I've been busy with the holiday so just now answering you. It sounds like you have it all taken care of, although in a long tedious process to get there. I understand what you did to get the depreciation numbers but want to give you a tip if you don't know it yet. When you go to "forms" view instead of "step-by-step" you can see all the forms listed in the left hand column. You should always be able to find the depreciation schedule for all of your assets listed in that column. It's usually down a ways on the list. Also, every year when I'm done with my returns (I do them for family also), on the screen where you can save the return as a pdf for your records, I always save all 3 of them. There is one that is all forms legally required to be filed, then the return plus key worksheets, and lastly the return plus all forms. That last one has many forms, schedules, and worksheets. I always have a few pages that I print to include for my paper records, depreciation being one of them. You could still get that for your records through the "Forms" view or the longer pdf file if you want it on file.

Second, even though you are all done with your return for this year, you could start TT, choose to start a new return, then transfer last year's (2021) and re-enter everything for this year. That way your home office will be there so you don't have to set everything up from scratch next year (if you have income). When you're finished and everything comes out exactly the way your original return did, you could then save it with just a slightly different name than the first one to distinguish it from the other. Maybe put a 2022-2 at the front. If it's not a ton of work, I think I'd do that. That way all your home office history will be transferred over next year as long as you make sure to transfer the #2 return over instead of the first one. I hope that makes sense. Anyway, good luck to you and I hope this discussion can help others out there also.

[micheleaey]

@AllyR:

So sorry been so long to reply, I got wrapped up after finishing up my taxes.  I put replying to you on my calendar and then did not do it the day I was supposed to and then got busy and basically I am so sorry. 

Thank you for replying and your idea of starting a new return.  It is an interesting notion and good for many but for me that is just way too much work since I have so many schedules in my return that I don't want to go back and redo it.  But, if I did that is a great suggestion I did not think about.  I appreciate you bringing that to my attention very much. 

The reason I went through all my tax returns back to 2003 when I started my home office is because I wanted to make sure what the total from my 2021 return said in the Prior Depreciation area was actually being carried forward correctly.  Over the years I have changed the sqft of the area of my home I used and for 2 years my husband had part of the room for his business and we split the office and the sqft being used.  I am supposed to keep track of all the depreciation.  So it was good that I went back and I now have a complete number back to when we started our home office.  The amount my husband took was not a part of my number so when I begin a new home office in the future - if I do - then I will enter the full amount of prior depreciation so I have the correct number moving forward for if and when we decide to sell the home we currently are living in.  

I do know the Tip of using Forms.  I go back and forth between the Step by Step and Forms all the time.  Been doing that for years. 

Yes, I do agree that saving all 3 of the returns to pdf is necessary just in case.  I have been doing that since using TT now.  Saving it to pdf does  allow you to move around easily by clicking on the forms at the side.  If you save the return as a "printable return" you can no longer do that.  I have to label my pdf's as the "Printable Return for Filing" so I know which is which so I don't have to open every pdf when wanting to print.  I was saving and printing from my home printer, but now I save it and go over to office depot to print so I need the printable pdf on a thumb drive that "Fits the page".  It is faster to print from Office Depot than my old printer since I have to print over 50 pages 2x (so over 100 pages).  One for filing and One for Me.

Yes, I print and do not use the online filing option - Old Fashioned and want to mail it in and not have my private information/tax return in the web somewhere between Turbo Tax and the IRS - just me, not very trusting that. 

I hope you were able to fix the problems you were having and file your return on time.  

I also hope this discussion helps someone in the future.

Take care AllyR

Michele