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Using IRS Form 8829
- Part I of Form 8829: You calculate the part of your home used for business. For most businesses, you simply divide the total square footage of your house by the square footage used for your business. If you run a daycare facility in your home in an area that's not exclusively used for the business, you'll have to make further adjustments.
- Part II: You list your total business income along with your deductible expenses. Follow the form's instructions and you end up with the total allowable expenses for the business use of your home.
- Part III: This part consists of six lines on which you calculate the depreciation of your home. You'll have to consult the instructions on the form to determine your allowable depreciation percentage.
- Part IV: In the final section, you determine any unallowed expense amount that can be carried over to the next tax year.