I plan to use the actual method (rather than simplified) to calculate home office expenses. As this is my first year operating a home-based business, I would like to clarify a few things before submitting my tax return docs:
1. Is there a way to see TurboTax's exact calculations for home office expenses? I followed the instructions for the actual method using Form 8829, but my calculation differs from what TurboTax shows, so I'd like to compare both calculations to ensure accuracy.
2. I received two Form 1098s as my mortgage was transferred to another servicer during the year. I have entered both forms into TurboTax. For purposes of calculating home office expenses, does it matter which mortgage I assign points paid at origination?
3. For purposes of calculating home office depreciation, what is the recommended way to enter the value of my home into TurboTax? Would there be any drawback to applying the total purchase price to Cost of Home and $0 to Cost of Land?
1. Is there a way to see TurboTax's exact calculations for home office expenses? I followed the instructions for the actual method using Form 8829, but my calculation differs from what TurboTax shows, so I'd like to compare both calculations to ensure accuracy.
Yes, you can view your 1040 and tax forms including Form 8829
Desktop users switch to FORMS (top right corner)
To View using TurboTax Online:
Select Tax Tools on the left side-bar
Select Tools from that drop-down
Select “View Tax Summary” on the TOOLS CENTER screen
Select “Preview my 1040” which now appears on the left side-bar
2. I received two Form 1098s as my mortgage was transferred to another servicer during the year. I have entered both forms into TurboTax. For purposes of calculating home office expenses, does it matter which mortgage I assign points paid at origination?
I assume points would be reported on the first (original) 1098. Entering them on a later 1098 could cause the program to amortize the points.
3. For purposes of calculating home office depreciation, what is the recommended way to enter the value of my home into TurboTax? Would there be any drawback to applying the total purchase price to Cost of Home and $0 to Cost of Land?
Land must have a value, so entering zero would not be an option.
Land does not depreciate, so allocating more value to the land would decrease the depreciation allowed. You should report what makes the most sense. You might use the county tax assessment for clarity.
REMEMBER that when you use actual expenses, you will be liable to claim the depreciation recapture (if any) when you sell. Since Real Estate tends to keep its value, there is usually depreciation recapture required.