TransactionFlow — Home Office Deduction

Nalepa Labs · TransactionFlow

Home Office

deduction — calculated, capped, and ready to file

SCHEDULE C · LINE 30 · FORM 8829

THE QUESTION

You work
from home.
How much can you deduct?

Two IRS-approved methods. Two completely different math problems. Get it wrong and you either leave money on the table — or trigger a Form 8829 cap that kills the deduction entirely.

YOUR HOME

TEST 1 · EXCLUSIVE USE

The space is used only for business — no personal use, no kids' homework, no guest bed.

TEST 2 · REGULAR USE

Used continuously for business — not occasional, not just at tax time.

TEST 3 · PRINCIPAL PLACE

It is your principal place of business, or where you regularly meet clients.

TWO METHODS

Pick the one that gives you the bigger deduction.

PTN runs both calculations side-by-side from your books. Whichever is larger flows to Schedule C, Line 30.

SIMPLIFIED METHOD

$5 × sq ft

capped at 300 sq ft = $1,500 max

NO RECEIPTS NEEDED

              Office sq ft240
            
              Eligible (cap 300)240
            
              × rate$5.00
            
              DEDUCTION
              $1,200

            ✓ no Form 8829 · ✓ no depreciation recapture · ✗ no carryforward of unused
          

REGULAR METHOD · FORM 8829

% of home × actual

no cap — but requires receipts

FROM YOUR LEDGER

              Rent / mortgage int.$28,800
            
              Utilities$3,600
            
              Insurance$1,450
            
              Repairs & maint.$820
            
              Depreciation$1,100
            
              Total home expenses$35,770
            
              × business use15.00%
            
              DEDUCTION
              $5,366

            ✓ no upper cap · ✓ unused excess carries forward · ⚠ depreciation recapture on sale
          

FORM 8829 · DRAFTED

Auto-filled,
cap-checked,
attached to Schedule C.

PTN computes Part I (% of home), Part II (actual expenses × %), and enforces the Line 36 gross-income cap — the deduction can't create or increase a Schedule C loss.

✓

LINE 36 CAP · PASSED

Tentative profit covers full deduction

SCHEDULE C IMPACT

Line 29 · Tentative$28,910
Line 30 · Home office$5,366
Line 31 · Net profit$23,544

Form 8829

Department of the Treasury
Internal Revenue Service

Expenses for Business Use of Your Home

▶ File only with Schedule C (Form 1040). Use a separate Form 8829 for each home.

▶ Go to www.irs.gov/Form8829 for instructions and the latest information.

OMB No. 1545-0074

2026

Attachment
Sequence No. 176

Name(s) of proprietor(s)

Marcus Chen

Your social security number

•••–••–4827

Part IPart of Your Home Used for Business

1

Area used regularly and exclusively for business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

240

2

Total area of home . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,600

3

Divide line 1 by line 2. Enter the result as a percentage . . . . . . . . . . . . . . . . . . . . . . .

15.00%

Part IIFigure Your Allowable Deduction

8

Enter the amount from Schedule C, line 29 (tentative profit before home office) . . . . .

28,910

See instructions for columns (a) and (b) before completing lines 9–22.

(a) Direct

(b) Indirect

10

Deductible mortgage interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

—

28,800

17

Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

—

1,450

18

Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

—

0

19

Repairs and maintenance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

—

820

20

Utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

—

3,600

22

Add lines 9 through 21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

—

34,670

23

Multiply line 22, column (b), by line 7 (% of home) . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5,201

29

Depreciation of your home (from line 41 below) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

165

35

Add lines 23, 28, and 29 (total before cap) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5,366

36

Allowable expenses. Enter the smaller of line 8 or line 35 here and on Schedule C, line 30.

5,366

43

Carryover of operating expenses to 2027. Subtract line 35 from line 26 . . .

0

For Paperwork Reduction Act Notice, see your tax return instructions.

Cat. No. 13232M

Form 8829 (2026)

DRAFT · LINE 36 ✓

CAPPED · LOSS LIMIT

PTN PIOLOGIX · TRANSACTION FLOW

Home office.
Calculated. Capped. Ready.

Both methods. Both safeguards. One click to file.