multiple businesses, multiple home offices in one apartment
Hi everyone,
I have one business (sole proprietor) and my spouse has two businesses, also sole proprietorships. We each have a home office in our apartment, and I'm trying to figure out the best way to calculate the home office deduction. I could use the simplified method but looking at past returns that were completed by a professional I see that our deductions would be significantly higher if we use the actual expense method. However, from this article, it looks like FreeTaxUSA doesn't support this use case:
"Under the actual expense method, you would need to figure out the percentage of time that the office space was used for each business. Then the usage percentage of each is applied to every home office expense in each separate business. NOTE: Currently, our software doesn’t support reporting the home office expense for multiple businesses using the actual expense method."
I wanted to confirm if that's in fact true. If so, I guess it doesn't make sense to use FreeTaxUSA if I'm going to lose out on a big deduction, right? I've added the three businesses and walked through the home office deduction sections and the software hasn't stopped me.
Comments
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@galapagoensis yes, at this time, our software does not support this. If you wish to use the actual expense method for your multiple businesses, you won't be able to use our software to file, unfortunately.
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If I know what the percentages are for each business in the same home office, can I just manually input it? For example, let's say my home office is 25% of my home and my utilities for the year are $4000. If I use my home office 30% of the time for business 1 and 70% of the time for business 2 and my total business use of utilities are $1000 (25% of $4K), then my business 1 utilities are $300 and business 2 is $700 for the year.
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Hello Ceem
It is super complicated to split the home office to multiple Schedule C businesses within the individual tax return. We did publish an article that can assist in this process to separate the expenses. This may not be possible to report on the Form 8829 Business use of Home accurately according to your work to separate the business activities. However, you are welcome to try or use the advice in this article.
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