What Is Tax Form 8829 for Business Use of Home Expenses?
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The COVID-19 pandemic has changed the workspace environment. Now more than ever, remote or at-home offices are becoming a common trend. There are, of course, both pros and cons to working remotely.
One such positive is tax deductions based on the business use of your home. This system has been taken advantage of, therefore, the IRS has strict protocols in place on how such tax deductions can be written off. With tax form 8829, you can determine what deductions you can legally apply for if you use your home as a business office.
If you use form 8829 correctly, you can save a significant amount of money legally. It is a great idea to learn more about IRS form 8829 and if it applies to you.
Context and History
Form 8829 is the direct result of The Home Office Provisions of the Taxpayer Relief Act of 1997. The bill, which was signed by President Bill Clinton, attempted to provide new standards for tax reductions. It was not until 1999 that the home office regulations went into effect.
Ultimately, the law created clearer language regarding what can be deductible. According to the Journal of Accountancy, The Taxpayer Relief Act “expand[ed] the definition of a principal place of business.” These provisions led to Form 8829 and the ability to apply more easily for home office expenses.
Prerequisites, Requirements, and Rules
IRS form 8829 walks you step by step on how to calculate and claim specific tax deductions in relation to business use of home expenses. What if form 8829 does not consider certain factors? No need to worry, here are the specifics.
To be able to receive such tax form 8829 deductions, a few key rules and requirements are in effect:
1. The home workspace has to be “your principal place of business.” In other words, your home is where you conduct most of your business operations from. If you work from home a couple of days a week but go into the office most of the time, you will not be able to deduct taxes. That would be unfair indeed and would go against what provisions the IRS and government have put in place.
2. You will have to carefully calculate how much of your home you use for business. It is legal only to apply for tax form 8829 deductions in the specific area designated for your business or work. Most of the time, this would be your home office workstation setup. The point here is you cannot also claim living room expenses even if you found yourself doing emails for an hour or two when watching your kids in the evening. Many Americans come home after a long day at the office and find themselves still conducting some kind of work after leaving the office.
3. In conjunction with point two, you have to have an exclusive, designated space for your business if you desire to apply for tax deductions. This space must be only used for your business.
Form 8829 in Detail
On the home office deduction form, you can select what business expenses you desire to deduct. These could include utilities, insurance, rent, and home depreciation among others. It would not be surprising if your electricity bill increased significantly if you are using power every day all day to stay digitally connected while you are working.
It is important to remember that these expenses are only applicable to the particular office space you have arranged. Turbotax explains it best. For instance, “if only 10% of the square footage of your house is reserved exclusively for business use, you can only use 10% of your home expenses as a business deduction.”
Tax form 8829 is divided into four sections. Part I allows you to specifically calculate the home area used for business purposes. A common method to do this is to “divide the total square footage of your house by the square footage used for your business.”
In Part II, you state your yearly business income as well as your claimed deductions. The form will guide you on further calculations, which will ultimately lead you to “the total allowable expenses for the business use in your home.”
Part III is the section in which you can claim home depreciation and calculate the depreciation value. Part IV allows you to state “any disallowed expense amount that can be carried over to the next tax year.”
Building the Dream Office Setup
If you plan to work from home and use Form 8829, it is important to build a comfortable and efficient home office setup to legitimately claim. Office customization and personalization can make the space uniquely yours. More crucially, the setup design should take your wellbeing and health into consideration.
What does this mean? The core products you select to use, such as your chair and desk, should be ergonomically designed. According to the Collins Dictionary, Ergonomics “is the study of how office equipment and furniture can be arranged so that people can do work or other activities more efficiently and comfortably.” Using an ergonomic chair, standing desk and other accessories can limit body discomfort and increase overall mood.
When caring for your body during the workday, you will be more focused, energized, and ultimately, productive. With the flexibility of a home office, you have the ability to select products that can truly make a difference.
According to studies described by Pacific Ergonomics, here are four startling statistics that demonstrate the need for ergonomic products:
- 64% of respondents admitted that “they were sitting on a hard surface.”75% of the respondents said they “using were the laptop monitors which creates neck strain.”
- 58% of respondents used an office chair, but a majority of these chairs were very uncomfortable and caused body pressure
- 27% of respondents were using dining room chairs as a substitute for office chairs
Using non-ergonomic products can have lasting negative implications. The saying “Be proactive, not reactive” definitely rings true with ergonomics.
Ergonomic office chairs are designed for adjustability, mobility, and seamless movement. By tilting or reclining, your back, neck, and hips can be far more comfortable. A key element of ergonomic chair structure is limiting pressure on your body.
Autonomous has a wide selection of ergonomic chairs to explore. The lineup includes ErgoChair Pro+, ErgoChair Pro, ErgoChair Recline, and ErgoChair Core. Each model offers an impressive degree of recline and lockable tilt positions.
For the most premium experience, ErgoChair Pro+ offers 26-degrees of recline and 11 tilt lockable positions. The chair is very breathable and was designed to be over nine times more durable than past models. ErgoChair Pro+ takes into consideration the fact that pressure is uniquely defined by the individual. When a user sits in it, it will adapt to said user’s body structure and provide support accordingly.
Selecting an ErgoChair would be a great asset to your at-home office setup. The chairs are designed to the highest standards, are aesthetically attractive, and are nationally recognized as competitive products on the market.
Standing desks are very complimentary to ergonomic chairs. Their design also incorporates adjustability and movement. A home standing desk invites you to work standing up, sitting down, or both. These products are height adjustable allowing for this flexibility.
Quality standing desks can often lift between 250 to 300+ lbs. Durability, strength, and a long-life cycle are central attributes. With the SmartDesk product lineup, you can receive all these benefits and way more.
The SmartDesk Pro, SmartDesk Core, SmartDesk Corner, SmartDesk Core Duo, and SmartDesk Connect are well-designed, ergonomic options that are perfect for your at-home workspace.
If you particularly desire a larger desk setup, the SmartDesk Corner offers double the space than any other SmartDesk option. It is L-shaped and can hold up to 400 lbs. Corner is height adjustable from 29.4” to 48” and built with a long-lasting and strong frame.
Home Office Essentials
There are other home office essentials besides a comfortable ergonomic chair and an effective standing desk. These include your preferred computer system (PC, Mac), an anti-fatigue mat, an ergonomic keyboard, desk lamp, filing cabinets, and a computer mouse.
Selecting a computer is very much a personal preference. Some individuals love the PC experience offered by manufacturers such as Microsoft, HP, and Dell, while others are dedicated Apple fans. If you are an artist or work in a creative business, Macs do provide an assortment of specific features tailored to you.
An anti-fatigue mat or a flow board are tools designed to boost energy and overall mood. In essence, they are comfortable places to stand when working or on a break. Using such products limits body pressure and strain.
Ergonomic keyboards are a huge plus when having an at-home office. Some of these models are even adjustably designed, offering even more comfortability. You can extend sections of the keyboard for better hand positioning and resting. The Ergonomic Keyboard for PC by Matias is one of the best available in the marketplace today.
Appropriate and sensitive lighting is key. Your eyes can get strained very easily with poor lighting and consistent computer screen viewing. Purchasing an LED desk or floor lamp can help you see better while protecting your vision.
Organization is at the heart of productivity and efficiency. While most documentation and communication is digital today, contracts and other valuable documents will need to be printed out on occasion. It is imperative to have a well-organized filing system so you can find paperwork quickly and without frustration. To achieve this, a simple filling cabinet is recommended. Such a cabinet can save you a lot of valuable time.
Office Desk Accessories
Helpful office desk accessories range in category, but they are truly the icing on the cake with your setup. From cable trays to wireless phone chargers, these accessories can help your office setup become the hub for your business needs.
You want an at-home office that has all the bells and whistles you need to achieve your goals. Purchasing a few desk accessories can make said space more personalized and at the same time effective.
Wireless chargers like the Universal Charging Dock by LumiCharge or Spruce Charger by Fledging can ensure all of your wireless devices are at full battery when you need them the most. These chargers can even charge multiple devices at once.
Cable trays aid in the organization process and help keep your office space neat and clean. A messy office with cords all over is never appealing and downright annoying at times. With a cable tray specified compatible with SmartDesks, all your wiring will be nicely organized.
The Bottom Line
Working at home provides some great benefits, and IRS Form 8829 is one of them. Who doesn’t like tax deductions? To successfully apply for these deductions, the IRS has set aside specific regulations to ensure fairness. One of the critical requirements is that you must have an exclusive at-home office setup just for business purposes.
This is actually a good thing! To work more efficiently, a dedicated space should be designed. Some tips and product ideas were suggested to guide you in building your dream office setup with proper tax Form 8829 guide. If you can take one thing away from this whole blog, remember to use products that can make a difference for your whole well-being.
By acquiring ergonomic products, you are investing in yourself. You know if you are more comfortable physically, you will be more equipped mentally. Even an item as routine as a chair or desk can make all the difference in the world.
It does not stop there though! Your home office should be decorated in a way that emulates you. If you have a favorite sports team or entertainment franchise, hang a respective poster on the wall. The goal is to make the setup an extension of yourself. You will feel at ease in the environment and will be ready to tackle the day’s challenges.
With an at-home office, you will be able to claim legitimate expenses on your taxes. To learn more about tax Form 8829, you can visit the IRS’s official page. It is encouraged you fill out tax Form 8829 carefully and thoroughly.
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