Filing Your Taxes Online is Fast, Easy and Secure.
Start now and receive your tax refund in as little as 7 days.

1. Get Answers

Your online questions are customized to your unique tax situation.

2. Maximize your Refund

Find tax credits for everything from school tuition to buying a hybri

3. E-File for FREE

E-file free with direct deposit to get your refund in as few as 7 days.

Filing your taxes with paper mail can be difficult and it could take weeks for your refund to arrive. IRS e-file is easy, fast and secure. There is no paperwork going to the IRS so tax refunds can be processed in as little as 7 days with direct deposit. As you prepare your taxes online, you can see your tax refund in real time.

FREE audit support and representation from an enrolled agent – NEW and only from H&R Block

H&r Block Free Tax File

1040x H&r BlockForm To Amend TaxesTax Form EzFiling Tax ReturnFreestatetaxesFree E File 1040xFree 1040ez 2014Irs Easy FormFree E FileIncome Tax Forms 2010How To Fill Out A Tax AmendmentTaxact 2010Taxslayer Login Page1040x Online Software1040nr 2011IrsHow Do I Amend My TaxesWww Irs GovWww Irs Gov 1040x2012 Tax Forms 1040a2011 Taxact LoginIrs 2012 Tax Forms 1040 EzTaxes HelpAmending Tax ReturnsHow To Do An Amended Tax Return On TurbotaxFree State Taxes FilingWww Irs Gov Form 1040x1040 Ez Form 2012State Tax ExtensionH&r Block Free State Tax FilingAmend 1040ez Tax FormH & R Block Free TaxesH&r Block Free Online E File1040 Income Tax FormsHow To Amend 2012 Federal Tax ReturnWww.irs.gov1040xFree Online 1040x FilingIrs Extension Form 20112009 Federal Tax FormsFile Only State Taxes Online Free

H&r Block Free Tax File

H&r block free tax file Index A Abandonment, Abandonment Accounting method Accrual, Accrual Method Cash, Cash Method Change in, Changes in Methods of Accounting Crop, Crop method. H&r block free tax file Farm inventory, Farm Inventory Accounting periods, Introduction Accrual method of accounting, Accrual Method Additional Medicare Tax withholding, What's New for 2013, Additional Medicare Tax. H&r block free tax file Adjusted basis for installment sale, Adjusted basis for installment sale purposes. H&r block free tax file Adjusted basis of assets, Adjusted Basis Agricultural activity codes, Schedule F, Reminders Agricultural program payments, Agricultural Program Payments Agricultural structure, defined, Agricultural structure. H&r block free tax file Alternative Depreciation System (ADS), Required use of ADS. H&r block free tax file , ADS election. H&r block free tax file Amortization Going into business, Business Start-Up Costs Reforestation expenses, Reforestation Costs Section 197 intangibles, Section 197 Intangibles Assessments By conservation district, Assessment by Conservation District Depreciable property, Assessment for Depreciable Property Assistance (see Tax help) Automobiles, depreciation, Limits for passenger automobiles. H&r block free tax file B Bankruptcy, Bankruptcy. H&r block free tax file Barter income, Barter income. H&r block free tax file Basis Adjusted, Adjusted basis. H&r block free tax file Installment sale, Adjusted basis for installment sale purposes. H&r block free tax file Involuntary conversion, Basis for depreciation. H&r block free tax file Like-kind exchange, Basis for depreciation. H&r block free tax file Partner's basis, Property Distributed From a Partnership or Corporation Replacement property, Basis of replacement property. H&r block free tax file Shareholder's basis, Property Distributed From a Partnership or Corporation Basis of assets Adjusted basis, Adjusted Basis Allocating to several assets, Allocating the Basis Changed to business use, Property changed from personal to business or rental use. H&r block free tax file Constructing assets, Constructing assets. H&r block free tax file Cost, Cost Basis Decreases, Decreases to Basis Depreciation, What Is the Basis for Depreciation? Exchanges Like-kind, Like-Kind Exchanges Nontaxable, Nontaxable Exchanges Partially nontaxable, Partially Nontaxable Exchanges Taxable, Taxable Exchanges Gifts, Property Received as a Gift Increases, Increases to Basis Real property, Real Property Received for services, Property received for services. H&r block free tax file Uniform capitalization rules, Uniform Capitalization Rules Below-market loans, Below-market loans. H&r block free tax file Books and records, Importance of Records Breeding fees, Breeding Fees Business income limit, section 179 expense deduction, Business Income Limit Business use of home, Business Use of Your Home C Canceled debt, Cancellation of Debt Capital assets, Capital Assets Capital expenses, Capital Expenses Car expenses, Truck and Car Expenses Cash method of accounting, Cash Method Casualties and thefts Adjustments to basis, Adjustments to basis. H&r block free tax file Casualty, defined, Casualty. H&r block free tax file Disaster area losses, Disaster Area Losses Leased property, Leased property. H&r block free tax file Livestock, Livestock or produce bought for resale. H&r block free tax file , Raised draft, breeding, dairy, or sporting animals. H&r block free tax file Reimbursement, Insurance and other reimbursements. H&r block free tax file Reporting gains and losses, Reporting Gains and Losses Theft, defined, Theft. H&r block free tax file Change in accounting method, Changes in Methods of Accounting Chickens, purchased, Chickens, seeds, and young plants. H&r block free tax file Christmas trees, Christmas tree cultivation. H&r block free tax file , Christmas trees. H&r block free tax file Club dues, Club dues and membership fees. H&r block free tax file Comments on publication, Comments and suggestions. H&r block free tax file Commodity Futures, Hedging (Commodity Futures) Wages, Noncash wages. H&r block free tax file Commodity Credit Corporation (CCC) Loans, Commodity Credit Corporation (CCC) Loans Market gain, Market Gain Community property, Community property. H&r block free tax file , Community property. H&r block free tax file Computer, software, Computer software. H&r block free tax file Condemnation, Casualties, Thefts, and Condemnations, Condemnation Conservation Cost-sharing exclusion, Conservation Expenses District assessments, Assessment by Conservation District Expenses, Conservation Expenses Plans, Conservation plan. H&r block free tax file Conservation Reserve Program, Conservation Reserve Program (CRP) payments. H&r block free tax file Conservation Reserve Program (CRP), Conservation Reserve Program (CRP) Constructing assets, Constructing assets. H&r block free tax file Constructive receipt of income, Constructive receipt. H&r block free tax file Contamination, Soil or other environmental contamination. H&r block free tax file Contract price, Contract price. H&r block free tax file Converted wetland, Converted Wetland and Highly Erodible Cropland Cooperatives, income from, Income From Cooperatives Cost-sharing exclusion, Cost-Sharing Exclusion (Improvements) Counter-cyclical payments, Direct payments and counter-cyclical payments. H&r block free tax file , Payments Under the Farm Security and Rural Investment Act of 2002 and Under the Food, Conservation, and Energy Act of 2008 Credits Employment, Employment Credits Fuel tax, Fuel tax credit and refund. H&r block free tax file , How To Claim a Credit or Refund, Claiming a Credit Social security and Medicare, Earning credits in 2013. H&r block free tax file Social security coverage, How to become insured under social security. H&r block free tax file State unemployment tax, Tax rate and credit. H&r block free tax file Crew leaders, Crew Leaders Crop Destroyed, Standing crop destroyed by casualty. H&r block free tax file Insurance proceeds, Crop Insurance and Crop Disaster Payments Method of accounting, Crop method. H&r block free tax file Shares, Rents (Including Crop Shares) Unharvested, Cost of raising unharvested crops. H&r block free tax file , Section 1231 transactions. H&r block free tax file , Gain or loss. H&r block free tax file Cropland, highly erodible, Converted Wetland and Highly Erodible Cropland D Damage Casualties and thefts, Casualties and Thefts Crop insurance, Crop Insurance and Crop Disaster Payments Tree seedlings, Tree Seedlings Debt Bad, Nonbusiness bad debt. H&r block free tax file Canceled, Cancellation of Debt, Canceled debt excluded from income. H&r block free tax file , Cancellation of debt. H&r block free tax file , Canceled debt. H&r block free tax file Nonrecourse, Amount realized on a nonrecourse debt. H&r block free tax file Qualified farm, Qualified Farm Debt Qualified principal residence, Qualified Principal Residence Debt Recourse, Amount realized on a recourse debt. H&r block free tax file Depletion, Depletion Depreciation, Claiming the Special Depreciation Allowance ADS election, ADS election. H&r block free tax file Conservation assets, Depreciable conservation assets. H&r block free tax file Deduction, Overview of Depreciation Incorrect amount deducted, How Do You Correct Depreciation Deductions? Limit for automobiles, Limits for passenger automobiles. H&r block free tax file Listed property, Additional Rules for Listed Property Raised livestock, Livestock. H&r block free tax file Recapture, When Do You Recapture MACRS Depreciation?, Depreciation Recapture, Section 1250 Property When to file, Do You Have To File Form 4562? Depreciation allowable, Basis adjustment for depreciation allowed or allowable. H&r block free tax file Depreciation allowed, Basis adjustment for depreciation allowed or allowable. H&r block free tax file Direct payments, Direct payments and counter-cyclical payments. H&r block free tax file , Payments Under the Farm Security and Rural Investment Act of 2002 and Under the Food, Conservation, and Energy Act of 2008 Disaster area losses, Disaster Area Losses Disaster payments, Crop Insurance and Crop Disaster Payments Disaster relief grants, Federal disaster relief grants. H&r block free tax file Disaster relief payments, Qualified disaster relief payments. H&r block free tax file Dispositions, Sale or other disposal of land during 9-year period. H&r block free tax file , Gain on sale of farmland. H&r block free tax file , Introduction Domestic production activities deduction, Domestic Production Activities Deduction Dyed diesel fuel, Dyed Diesel Fuel and Dyed Kerosene Dyed kerosene, Dyed Diesel Fuel and Dyed Kerosene E e-file, Reminders Easement, Easements and rights-of-way. H&r block free tax file , Easements. H&r block free tax file Election ADS depreciation, Electing ADS. H&r block free tax file , ADS election. H&r block free tax file Amortization Business start-up costs, Business Start-Up Costs Reforestation costs, Reforestation Costs Crop method, Election to use crop method. H&r block free tax file Cutting of timber, Election to treat cutting as a sale or exchange. H&r block free tax file Deducting conservation expenses, When to Deduct or Capitalize Not excluding cost-sharing payments, Electing not to exclude payments. H&r block free tax file Out of installment method, Electing out of the installment method. H&r block free tax file Postponing casualty gain, Postponing Gain Postponing reporting crop insurance proceeds, Election to postpone reporting until the following year. H&r block free tax file Section 179 expense deduction, How Do You Elect the Deduction? Electronic filing, Reminders Embryo transplants, Transplanted embryo. H&r block free tax file Employer identification number, Reminders, Employer identification number (EIN). H&r block free tax file Endangered species recovery expenses, Endangered species recovery expenses. H&r block free tax file Environmental contamination, Soil or other environmental contamination. H&r block free tax file Estimated tax Farm gross income, Gross Income From Farming Gross income, Gross Income Penalties, Estimated Tax Penalty for 2013 Exchanges Basis Like-kind, Like-Kind Exchanges Nontaxable, Nontaxable Exchanges Partially nontaxable, Partially Nontaxable Exchanges Taxable, Taxable Exchanges Like-kind, Like-Kind Exchanges Nontaxable, Like-Kind Exchanges Excise taxes Credit, Claiming a Credit Diesel fuel, Dyed Diesel Fuel and Dyed Kerosene Farming purposes, Fuels Used in Farming Home use of fuels, Fuels Used for Household Purposes or Other Than as a Fuel for Propulsion Engines Off-highway uses, Fuels Used in Off-Highway Business Use Refund, Claiming a Refund F Fair market value defined, Fair market value (FMV). H&r block free tax file , Fair market value (FMV). H&r block free tax file Family member Business expenses, Special rule for related persons. H&r block free tax file Installment sale, Sale to a related person. H&r block free tax file Like-kind exchange, Like-kind exchanges between related persons. H&r block free tax file Loss on sale or exchange of property, Losses from sales or exchanges between related persons. H&r block free tax file Personal-use property, Personal-use property. H&r block free tax file Social security coverage, Family Employees Farm Business expenses, Farm Business Expenses Business, defined, Business of Farming Defined, Farm defined. H&r block free tax file , Farm. H&r block free tax file Income averaging, Income Averaging for Farmers Rental, Farm rental. H&r block free tax file Sale of, Sale of a Farm Farmer, Farmer. H&r block free tax file Federal unemployment tax (FUTA), Federal Unemployment (FUTA) Tax Fertilizer, Fertilizer and Lime, Fertilizer and Lime Foreclosure, Foreclosure or Repossession Forestation costs, Forestation and reforestation costs. H&r block free tax file Form 1099-A, Form 1099-A. H&r block free tax file , Forms 1099-A and 1099-C. H&r block free tax file 1099-C, Cancellation of Debt, Form 1099-C. H&r block free tax file , Forms 1099-A and 1099-C. H&r block free tax file 1099-G, Market Gain, Payment to More Than One Person 1099-MISC, Reminders, Nonemployee compensation. H&r block free tax file 1099-PATR, Form 1099-PATR. H&r block free tax file 1128, Introduction 2210-F, Estimated Tax Penalty for 2013 3115, Changes in Methods of Accounting 4136, Claiming a Credit 4562, Do You Have To File Form 4562? 4797, Form 4797. H&r block free tax file , Recapture. H&r block free tax file , Reporting the exchange. H&r block free tax file 4835, Rents (Including Crop Shares) 5213, Using the presumption later. H&r block free tax file 6252, Form 6252. H&r block free tax file 8822, Reminders 8824, Reporting the exchange. H&r block free tax file 8849, Claiming a Refund 8886, Reminders 940, Form 940. H&r block free tax file 943, Form 943. H&r block free tax file 982, Form 982 I-9, Form I-9. H&r block free tax file SS-4, Reminders, Employer identification number (EIN). H&r block free tax file SS-5, Obtaining a social security number. H&r block free tax file T (Timber), Form T (Timber). H&r block free tax file W-2, Form W-2. H&r block free tax file W-4, Reminders, New hire reporting. H&r block free tax file , Form W-4. H&r block free tax file W-4V, Commodity Credit Corporation (CCC) Loans, Crop Insurance and Crop Disaster Payments W-7, Obtaining an individual taxpayer identification number. H&r block free tax file Free tax services, How To Get Tax Help, Free help with your tax return. H&r block free tax file Fuel tax credit or refund, Fuel tax credit and refund. H&r block free tax file , How To Claim a Credit or Refund G Gains and losses Basis of assets, Cost Basis Capital assets, defined, Capital Assets Casualty, How To Figure a Loss, Figuring a Gain Installment sales, Installment Sales Livestock, Livestock Long- or short-term, Long and Short Term Ordinary or capital, Ordinary or Capital Gain or Loss Sale of farm, Sale of a Farm Section 1231, Section 1231 Gains and Losses Theft, How To Figure a Loss, Figuring a Gain Timber, Timber General asset accounts, How Do You Use General Asset Accounts? Gifts, Crop shares you give to others (gift). H&r block free tax file , Cost related to gifts. H&r block free tax file , Property Received as a Gift, Gift. H&r block free tax file Going into business, Business Start-Up Costs Grants, disaster relief, Federal disaster relief grants. H&r block free tax file Gross profit percentage, Gross profit percentage. H&r block free tax file Gross profit, defined, Gross profit. H&r block free tax file Guarantee, Debt not payable on demand. H&r block free tax file H Health insurance deduction, Self-employed health insurance deduction. H&r block free tax file Hedging, Hedging (Commodity Futures) Help (see Tax help) Highway use tax, Highway use tax. H&r block free tax file Holding period, Holding period. H&r block free tax file Horticultural structure, Horticultural structure. H&r block free tax file I Illegal irrigation subsidy, Illegal federal irrigation subsidy. H&r block free tax file Important dates, Important Dates for 2014 Improvements, Cost-Sharing Exclusion (Improvements) Income Accounting for, Accounting Methods Accrual method of accounting, Income Canceled debt excluded, Cancellation of Debt From farming, Farm Income, Gross income from farming. H&r block free tax file , Gross Income From Farming Gross, Gross Income Not-for-profit farming, Not-for-Profit Farming Pasture, Pasture income and rental. H&r block free tax file Schedule F, Farm Income Withholding of tax, Federal Income Tax Withholding Income averaging (see Farm: Income averaging) Incorrect amount of depreciation deducted, How Do You Correct Depreciation Deductions? Individual taxpayer identification number (ITIN), Obtaining an individual taxpayer identification number. H&r block free tax file Inherited property, Inherited Property Insolvency, Insolvency. H&r block free tax file Installment sales, Form 6252. H&r block free tax file Electing out, Electing out of the installment method. H&r block free tax file Farm, sale of, Installment Sale of a Farm Figuring income, Figuring Installment Sale Income Reporting income, Form 6252. H&r block free tax file Unstated interest, Unstated interest. H&r block free tax file Insurance, Insurance, Self-employed health insurance deduction. H&r block free tax file Intangible property, Section 197 Intangibles Interest Expense, Interest Income, Interest income. H&r block free tax file Unstated, Unstated interest. H&r block free tax file Inventory Items included, Farm Inventory Methods of valuation, Inventory valuation methods. H&r block free tax file Involuntary conversions, Involuntary Conversions, Property acquired in a like-kind exchange or involuntary conversion. H&r block free tax file , Introduction Irrigation Illegal subsidy, Illegal federal irrigation subsidy. H&r block free tax file Project, Irrigation Project L Labor hired, Labor Hired Landlord participation, Landlord Participation in Farming Lease or purchase, Lease or Purchase Life tenant (see Term interests) Like-kind exchanges, Like-Kind Exchanges, Like-Kind Exchanges Lime, Fertilizer and Lime Limits At-risk, At-Risk Limits Business use of home, Deduction limit. H&r block free tax file Capital losses, Treatment of Capital Losses Conservation expenses, Assessment for Depreciable Property, 25% Limit on Deduction Depreciation Business-use, What Is the Business-Use Requirement? Excluded farm debt, Exclusion limit. H&r block free tax file Farm losses, Losses From Operating a Farm Loss of personal-use property, Deduction Limits on Losses of Personal-Use Property Not-for-profit farming, Not-for-Profit Farming Passive activity, Passive Activity Limits Percentage depletion, Taxable income limit. H&r block free tax file Prepaid farm supplies, Deduction limit. H&r block free tax file Reforestation costs, Reforestation Costs Section 179 expense deduction Automobile, Limits for passenger automobiles. H&r block free tax file Business income, Business Income Limit Dollar, Dollar Limits Time to keep records, How Long To Keep Records Listed property Defined, What Is Listed Property? Passenger automobile, Passenger automobiles. H&r block free tax file Rules, Additional Rules for Listed Property Livestock, Section 1231 transactions. H&r block free tax file Casualty and theft losses, Livestock or produce bought for resale. H&r block free tax file Crop shares, Crop shares you use to feed livestock. H&r block free tax file Depreciation, Livestock. H&r block free tax file Diseased, Diseased livestock. H&r block free tax file Feed assistance, Feed Assistance and Payments Immature, Immature livestock. H&r block free tax file Losses, Loss of livestock. H&r block free tax file , Livestock Purchased, Purchased livestock. H&r block free tax file Raised, Raised livestock. H&r block free tax file Sale of, Sales of Farm Products, Livestock Unit-livestock-price, inventory valuation, Unit-livestock-price method. H&r block free tax file Used in a farm business, Livestock used in farm business. H&r block free tax file Weather-related sales, Sales Caused by Weather-Related Conditions, Weather-related sales of livestock. H&r block free tax file Loans, Commodity Credit Corporation (CCC) Loans, Loan expenses. H&r block free tax file Losses At-risk limits, At-Risk Limits Casualty, Casualties, Thefts, and Condemnations Disaster areas, Disaster Area Losses Farming, Farming Losses Growing crops, Loss of growing plants, produce, and crops. H&r block free tax file Hobby farming, Not-for-Profit Farming Livestock, Livestock, Diseased livestock. H&r block free tax file Nondeductible, Other Nondeductible Items Theft, Casualties, Thefts, and Condemnations Lost income payments, Lost income payments. H&r block free tax file Lost property, Mislaid or lost property. H&r block free tax file M MACRS property Involuntary conversion, Property acquired in a like-kind exchange or involuntary conversion. H&r block free tax file Like-kind exchange, Property acquired in a like-kind exchange or involuntary conversion. H&r block free tax file Nontaxable transfer, Property acquired in a nontaxable transfer. H&r block free tax file Market gain, reporting, Market Gain Marketing quota penalties, Marketing Quota Penalties Material participation, Landlord Participation in Farming Meals, Meals. H&r block free tax file Membership fees, Club dues and membership fees. H&r block free tax file Methods of accounting, Accounting Methods Modified ACRS (MACRS) ADS election, ADS election. H&r block free tax file Conventions, Which Convention Applies? Depreciation methods, Which Depreciation Method Applies? Exchange, Property acquired in a like-kind exchange or involuntary conversion. H&r block free tax file Figuring the deduction, How Is the Depreciation Deduction Figured? Involuntary conversion, Property acquired in a like-kind exchange or involuntary conversion. H&r block free tax file Nontaxable transfer, Property acquired in a nontaxable transfer. H&r block free tax file Percentage tables, Rules for using the tables. H&r block free tax file Property classes, Which Property Class Applies Under GDS? Recovery periods, Which Recovery Period Applies? N New hire reporting, New hire reporting. H&r block free tax file Noncapital asset, Noncapital Assets Nontaxable exchanges, Like-Kind Exchanges Nontaxable transfer of MACRS property, Property acquired in a nontaxable transfer. H&r block free tax file Not-for-profit farming, Not-for-Profit Farming O Organizational costs, Business start-up and organizational costs. H&r block free tax file P Partners, limited, Limited partner. H&r block free tax file Partners, retired, Retired partner. H&r block free tax file Partners, Spouse, Business Owned and Operated by Spouses. H&r block free tax file Partnership, Partnership income or loss. H&r block free tax file Passenger automobile, Passenger automobiles. H&r block free tax file Pasture income, Pasture income and rental. H&r block free tax file Patronage dividends, Patronage Dividends Payments considered received, Payments Received or Considered Received Payments received, Payments Received or Considered Received Penalties Estimated tax, Estimated Tax Penalty for 2013 Returns, Estimated Tax Penalty for 2013 Trust fund recovery, Trust fund recovery penalty. H&r block free tax file Per-unit retain certificates, Per-Unit Retain Certificates Personal expenses, Personal, Living, and Family Expenses Placed in service, Placed in Service, What Is the Placed-in-Service Date? Postponing casualty gain, Postponing Gain Prepaid expense Advance premiums, Advance premiums. H&r block free tax file Extends useful life, Prepayment. H&r block free tax file Farm supplies, Prepaid Farm Supplies Livestock feed, Prepaid Livestock Feed Prizes, Prizes. H&r block free tax file Produce, Sales of Farm Products Property Changed to business use, Property changed from personal to business or rental use. H&r block free tax file Received for services, Property received for services. H&r block free tax file Repairs and improvements, How Do You Treat Repairs and Improvements? Section 1231, Section 1231 transactions. H&r block free tax file Section 1245, Section 1245 Property Section 1250, Section 1250 Property Section 1252, Section 1252 property. H&r block free tax file Section 1255, Section 1255 property. H&r block free tax file Tangible personal, Tangible personal property. H&r block free tax file Publications (see Tax help) Q Qualified disaster relief payments, Qualified disaster relief payments. H&r block free tax file Qualified farm debt, Qualified Farm Debt Qualified joint venture, Qualified joint venture. H&r block free tax file Qualified principal residence debt, Qualified Principal Residence Debt R Recapture Amortization, Depreciation and amortization. H&r block free tax file Basis reductions, Recapture of basis reductions. H&r block free tax file Certain depreciation, Recapture of certain depreciation. H&r block free tax file Cost-sharing payments, Recapture. H&r block free tax file Depreciation, When Do You Recapture MACRS Depreciation?, Depreciation Recapture, Depreciation recapture. H&r block free tax file Section 1245 property, Section 1245 Property Section 1250 property, Section 1250 Property Section 179 expense deduction, When Must You Recapture the Deduction? Section 179 GO Zone property, Recapture for qualified section 179 GO Zone property. H&r block free tax file Special depreciation allowance, When Must You Recapture an Allowance Recordkeeping, Importance of Records, Meals. H&r block free tax file Records on depreciable property, Depreciation Recapture Reforestation costs, Forestation and reforestation costs. H&r block free tax file , Reforestation Costs Refund Deduction taken, Refund or reimbursement. H&r block free tax file Fuel tax, Fuel tax credit and refund. H&r block free tax file , Including the Credit or Refund in Income Reimbursements Casualties and thefts, Casualty and theft losses. H&r block free tax file , Casualties and Thefts, Insurance and other reimbursements. H&r block free tax file Deduction taken, Refund or reimbursement. H&r block free tax file Expenses, Reimbursed expenses. H&r block free tax file Feed assistance, Feed Assistance and Payments Real estate taxes, Real estate taxes. H&r block free tax file Reforestation expenses, Qualifying costs. H&r block free tax file To employees, Reimbursements to employees. H&r block free tax file Related persons, Special rule for related persons. H&r block free tax file , Losses from sales or exchanges between related persons. H&r block free tax file , Special rules for related persons. H&r block free tax file , Like-kind exchanges between related persons. H&r block free tax file , Sale to a related person. H&r block free tax file , Buying replacement property from a related person. H&r block free tax file , Related persons. H&r block free tax file Rental income, Rents (Including Crop Shares) Rented property, improvements, Improvements to rented property. H&r block free tax file Repairs, Repairs and Maintenance Repairs and improvements, How Do You Treat Repairs and Improvements? Repayment of income, Repayment of income. H&r block free tax file Replacement Period, Replacement Period Property, Replacement Property Reportable transactions. H&r block free tax file , Reminders Repossessions, Foreclosure or Repossession Right-of-way income, Easements and rights-of-way. H&r block free tax file S Sale of home, Sale of your home. H&r block free tax file Section 179 expense deduction, Section 179 Expense Deduction How to elect, How Do You Elect the Deduction? Listed property, Additional Rules for Listed Property Qualifying property, What Property Qualifies? Recapture, When Must You Recapture the Deduction? Self-employed health insurance, Self-employed health insurance deduction. H&r block free tax file Self-employed health insurance deduction, Self-employed health insurance deduction. H&r block free tax file Self-employment tax Community property, Community property. H&r block free tax file Deduction, Deduction for employer-equivalent portion of self-employment tax. H&r block free tax file How to pay, How To Pay Self-Employment Tax Landlord participation, Landlord Participation in Farming Material participation, Material participation for landlords. H&r block free tax file Maximum net earnings, What's New for 2013 Methods for figuring net earnings, Methods for Figuring Net Earnings Optional method, Farm Optional Method Regular method, Regular Method Rental income, Landlord Participation in Farming Reporting, Reporting Self-Employment Tax Self-employment tax rate, Self-employment tax rate. H&r block free tax file Share farming, Share farmer. H&r block free tax file Tax rates, What's New for 2013 Who must pay, Who Must Pay Self-Employment Tax? Selling expenses, Selling expenses. H&r block free tax file Selling price Defined, Selling price. H&r block free tax file Reduced, Selling price reduced. H&r block free tax file Settlement costs (fees), Settlement costs. H&r block free tax file Social security and Medicare Credits of coverage, Earning credits in 2013. H&r block free tax file Withholding of tax, Social Security and Medicare Taxes Social security number, Obtaining a social security number. H&r block free tax file Software, computer, Computer software. H&r block free tax file Soil Conservation, Conservation Expenses Contamination, Soil or other environmental contamination. H&r block free tax file Special depreciation allowance How to elect not to claim, How Can You Elect Not To Claim the Allowance? Recapture, When Must You Recapture an Allowance Standard mileage rate, Standard mileage rate. H&r block free tax file Start-up costs for businesses, Business start-up and organizational costs. H&r block free tax file Suggestions for publication, Comments and suggestions. H&r block free tax file T Tangible personal property, Tangible personal property. H&r block free tax file Tax help, How To Get Tax Help Tax preparation fees, Tax preparation fees. H&r block free tax file Tax shelter At-risk limits, At-Risk Limits Defined, Tax shelter. H&r block free tax file Tax-free exchanges, Like-Kind Exchanges Taxes Excise, Excise Taxes Federal use, Highway use tax. H&r block free tax file General, Taxes Self-employment, Self-Employment Tax State and federal, State and federal income taxes. H&r block free tax file State and local general sales, State and local general sales taxes. H&r block free tax file Withholding, Federal income tax withholding. H&r block free tax file , Social Security and Medicare Taxes, Federal Income Tax Withholding Telephone expense, Telephone expense. H&r block free tax file Tenant house expenses, Tenant House Expenses Term interests, Certain term interests in property. H&r block free tax file Theft losses, Casualties, Thefts, and Condemnations Timber, Timber. H&r block free tax file , Timber Depletion, Timber Tobacco quota buyout payments, Tobacco Quota Buyout Program Payments Tobacco settlement payments, National Tobacco Growers' Settlement Trust Fund Payments Trade-in, Sale and Purchase Travel expenses, Travel Expenses Truck expenses, Truck and Car Expenses Trust fund recovery penalty, Trust fund recovery penalty. H&r block free tax file TTY/TDD information, How To Get Tax Help U Uniform capitalization rules Basis of assets, Uniform Capitalization Rules Inventory, Uniform capitalization rules. H&r block free tax file Unstated interest, Unstated interest. H&r block free tax file W Wages and salaries, Wages and salaries. H&r block free tax file Water conservation, Conservation Expenses Water well, Water well. H&r block free tax file , Water wells. H&r block free tax file Weather-related sales, livestock, Sales Caused by Weather-Related Conditions, Weather-related sales of livestock. H&r block free tax file Withholding Income tax, Federal Income Tax Withholding Social security and Medicare tax, Social Security and Medicare Taxes Prev  Up     Home   More Online Publications
 
Print - Click this link to Print this page

IRS.gov Accessibility

What is Accessibility?
Accessibility refers to ensuring that access to information is available to the widest possible audience.

Accessible Forms & Publications
Select from a list of accessible tax forms, publications, large print, and "talking" tax forms.

American Sign Language (ASL) videos
Select from a list of ASL videos hosted on the IRS YouTube channel.

Accessibility Features of the Website
IRS has implemented numerous accessibility features in compliance with federal regulations.

User Comments
We invite you to comment on our web site accessibility policies.

Change Text Size
Hints for increasing or decreasing the font size on IRS.gov.

Page Last Reviewed or Updated: 19-Mar-2014

The H&r Block Free Tax File

H&r block free tax file Publication 587 - Main Content Table of Contents Qualifying for a DeductionExclusive Use Regular Use Trade or Business Use Principal Place of Business Place To Meet Patients, Clients, or Customers Separate Structure Figuring the DeductionUsing Actual Expenses Using the Simplified Method Daycare Facility Standard meal and snack rates. H&r block free tax file Sale or Exchange of Your HomeGain on Sale Depreciation Basis Adjustment Reporting the Sale More Information Business Furniture and EquipmentListed Property Property Bought for Business Use Personal Property Converted to Business Use Recordkeeping Where To DeductSelf-Employed Persons Employees Partners How To Get Tax HelpLow Income Taxpayer Clinics Worksheet To Figure the Deduction for Business Use of Your HomeInstructions for the Worksheet Worksheets To Figure the Deduction for Business Use of Your Home (Simplified Method) Instructions for the Simplified Method Worksheet Instructions for the Daycare Facility Worksheet Instructions for the Area Adjustment Worksheet Qualifying for a Deduction Generally, you cannot deduct items related to your home, such as mortgage interest, real estate taxes, utilities, maintenance, rent, depreciation, or property insurance, as business expenses. H&r block free tax file However, you may be able to deduct expenses related to the business use of part of your home if you meet specific requirements. H&r block free tax file Even then, the deductible amount of these types of expenses may be limited. H&r block free tax file Use this section and Figure A, later, to decide if you can deduct expenses for the business use of your home. H&r block free tax file To qualify to deduct expenses for business use of your home, you must use part of your home: Exclusively and regularly as your principal place of business (defined later), Exclusively and regularly as a place where you meet or deal with patients, clients, or customers in the normal course of your trade or business, In the case of a separate structure which is not attached to your home, in connection with your trade or business, On a regular basis for certain storage use (see Storage of inventory or product samples , later), For rental use (see Publication 527), or As a daycare facility (see Daycare Facility , later). H&r block free tax file Additional tests for employee use. H&r block free tax file   If you are an employee and you use a part of your home for business, you may qualify for a deduction for its business use. H&r block free tax file You must meet the tests discussed earlier plus: Your business use must be for the convenience of your employer, and You must not rent any part of your home to your employer and use the rented portion to perform services as an employee for that employer. H&r block free tax file If the use of the home office is merely appropriate and helpful, you cannot deduct expenses for the business use of your home. H&r block free tax file Exclusive Use To qualify under the exclusive use test, you must use a specific area of your home only for your trade or business. H&r block free tax file The area used for business can be a room or other separately identifiable space. H&r block free tax file The space does not need to be marked off by a permanent partition. H&r block free tax file You do not meet the requirements of the exclusive use test if you use the area in question both for business and for personal purposes. H&r block free tax file Example. H&r block free tax file You are an attorney and use a den in your home to write legal briefs and prepare clients' tax returns. H&r block free tax file Your family also uses the den for recreation. H&r block free tax file The den is not used exclusively in your trade or business, so you cannot claim a deduction for the business use of the den. H&r block free tax file Exceptions to Exclusive Use You do not have to meet the exclusive use test if either of the following applies. H&r block free tax file You use part of your home for the storage of inventory or product samples (discussed next). H&r block free tax file You use part of your home as a daycare facility, discussed later under Daycare Facility . H&r block free tax file Note. H&r block free tax file With the exception of these two uses, any portion of the home used for business purposes must meet the exclusive use test. H&r block free tax file Storage of inventory or product samples. H&r block free tax file    If you use part of your home for storage of inventory or product samples, you can deduct expenses for the business use of your home without meeting the exclusive use test. H&r block free tax file However, you must meet all the following tests. H&r block free tax file You sell products at wholesale or retail as your trade or business. H&r block free tax file You keep the inventory or product samples in your home for use in your trade or business. H&r block free tax file Your home is the only fixed location of your trade or business. H&r block free tax file You use the storage space on a regular basis. H&r block free tax file The space you use is a separately identifiable space suitable for storage. H&r block free tax file Example. H&r block free tax file Your home is the only fixed location of your business of selling mechanics' tools at retail. H&r block free tax file You regularly use half of your basement for storage of inventory and product samples. H&r block free tax file You sometimes use the area for personal purposes. H&r block free tax file The expenses for the storage space are deductible even though you do not use this part of your basement exclusively for business. H&r block free tax file Regular Use To qualify under the regular use test, you must use a specific area of your home for business on a regular basis. H&r block free tax file Incidental or occasional business use is not regular use. H&r block free tax file You must consider all facts and circumstances in determining whether your use is on a regular basis. H&r block free tax file Trade or Business Use To qualify under the trade-or-business-use test, you must use part of your home in connection with a trade or business. H&r block free tax file If you use your home for a profit-seeking activity that is not a trade or business, you cannot take a deduction for its business use. H&r block free tax file Example. H&r block free tax file You use part of your home exclusively and regularly to read financial periodicals and reports, clip bond coupons, and carry out similar activities related to your own investments. H&r block free tax file You do not make investments as a broker or dealer. H&r block free tax file So, your activities are not part of a trade or business and you cannot take a deduction for the business use of your home. H&r block free tax file Principal Place of Business You can have more than one business location, including your home, for a single trade or business. H&r block free tax file To qualify to deduct the expenses for the business use of your home under the principal place of business test, your home must be your principal place of business for that trade or business. H&r block free tax file To determine whether your home is your principal place of business, you must consider: The relative importance of the activities performed at each place where you conduct business, and The amount of time spent at each place where you conduct business. H&r block free tax file Your home office will qualify as your principal place of business if you meet the following requirements. H&r block free tax file You use it exclusively and regularly for administrative or management activities of your trade or business. H&r block free tax file You have no other fixed location where you conduct substantial administrative or management activities of your trade or business. H&r block free tax file If, after considering your business locations, your home cannot be identified as your principal place of business, you cannot deduct home office expenses. H&r block free tax file However, see the later discussions under Place To Meet Patients, Clients, or Customers and Separate Structure for other ways to qualify to deduct home office expenses. H&r block free tax file Administrative or management activities. H&r block free tax file   There are many activities that are administrative or managerial in nature. H&r block free tax file The following are a few examples. H&r block free tax file Billing customers, clients, or patients. H&r block free tax file Keeping books and records. H&r block free tax file Ordering supplies. H&r block free tax file Setting up appointments. H&r block free tax file Forwarding orders or writing reports. H&r block free tax file Administrative or management activities performed at other locations. H&r block free tax file   The following activities performed by you or others will not disqualify your home office from being your principal place of business. H&r block free tax file You have others conduct your administrative or management activities at locations other than your home. H&r block free tax file (For example, another company does your billing from its place of business. H&r block free tax file ) You conduct administrative or management activities at places that are not fixed locations of your business, such as in a car or a hotel room. H&r block free tax file You occasionally conduct minimal administrative or management activities at a fixed location outside your home. H&r block free tax file You conduct substantial nonadministrative or nonmanagement business activities at a fixed location outside your home. H&r block free tax file (For example, you meet with or provide services to customers, clients, or patients at a fixed location of the business outside your home. H&r block free tax file ) You have suitable space to conduct administrative or management activities outside your home, but choose to use your home office for those activities instead. H&r block free tax file Please click here for the text description of the image. H&r block free tax file Can you deduct business use of the home expenses? Example 1. H&r block free tax file John is a self-employed plumber. H&r block free tax file Most of John's time is spent at customers' homes and offices installing and repairing plumbing. H&r block free tax file He has a small office in his home that he uses exclusively and regularly for the administrative or management activities of his business, such as phoning customers, ordering supplies, and keeping his books. H&r block free tax file John writes up estimates and records of work completed at his customers' premises. H&r block free tax file He does not conduct any substantial administrative or management activities at any fixed location other than his home office. H&r block free tax file John does not do his own billing. H&r block free tax file He uses a local bookkeeping service to bill his customers. H&r block free tax file John's home office qualifies as his principal place of business for deducting expenses for its use. H&r block free tax file He uses the home office for the administrative or managerial activities of his plumbing business and he has no other fixed location where he conducts these administrative or managerial activities. H&r block free tax file His choice to have his billing done by another company does not disqualify his home office from being his principal place of business. H&r block free tax file He meets all the qualifications, including principal place of business, so he can deduct expenses (subject to certain limitations, explained later) for the business use of his home. H&r block free tax file Example 2. H&r block free tax file Pamela is a self-employed sales representative for several different product lines. H&r block free tax file She has an office in her home that she uses exclusively and regularly to set up appointments and write up orders and other reports for the companies whose products she sells. H&r block free tax file She occasionally writes up orders and sets up appointments from her hotel room when she is away on business overnight. H&r block free tax file Pamela's business is selling products to customers at various locations throughout her territory. H&r block free tax file To make these sales, she regularly visits customers to explain the available products and take orders. H&r block free tax file Pamela's home office qualifies as her principal place of business for deducting expenses for its use. H&r block free tax file She conducts administrative or management activities there and she has no other fixed location where she conducts substantial administrative or management activities. H&r block free tax file The fact that she conducts some administrative or management activities in her hotel room (not a fixed location) does not disqualify her home office from being her principal place of business. H&r block free tax file She meets all the qualifications, including principal place of business, so she can deduct expenses (subject to certain limitations, explained later) for the business use of her home. H&r block free tax file Example 3. H&r block free tax file Paul is a self-employed anesthesiologist. H&r block free tax file He spends the majority of his time administering anesthesia and postoperative care in three local hospitals. H&r block free tax file One of the hospitals provides him with a small shared office where he could conduct administrative or management activities. H&r block free tax file Paul very rarely uses the office the hospital provides. H&r block free tax file He uses a room in his home that he has converted to an office. H&r block free tax file He uses this room exclusively and regularly to conduct all the following activities. H&r block free tax file Contacting patients, surgeons, and hospitals regarding scheduling. H&r block free tax file Preparing for treatments and presentations. H&r block free tax file Maintaining billing records and patient logs. H&r block free tax file Satisfying continuing medical education requirements. H&r block free tax file Reading medical journals and books. H&r block free tax file Paul's home office qualifies as his principal place of business for deducting expenses for its use. H&r block free tax file He conducts administrative or management activities for his business as an anesthesiologist there and he has no other fixed location where he conducts substantial administrative or management activities for this business. H&r block free tax file His choice to use his home office instead of the one provided by the hospital does not disqualify his home office from being his principal place of business. H&r block free tax file His performance of substantial nonadministrative or nonmanagement activities at fixed locations outside his home also does not disqualify his home office from being his principal place of business. H&r block free tax file He meets all the qualifications, including principal place of business, so he can deduct expenses (subject to certain limitations, explained later) for the business use of his home. H&r block free tax file Example 4. H&r block free tax file Kathleen is employed as a teacher. H&r block free tax file She is required to teach and meet with students at the school and to grade papers and tests. H&r block free tax file The school provides her with a small office where she can work on her lesson plans, grade papers and tests, and meet with parents and students. H&r block free tax file The school does not require her to work at home. H&r block free tax file Kathleen prefers to use the office she has set up in her home and does not use the one provided by the school. H&r block free tax file She uses this home office exclusively and regularly for the administrative duties of her teaching job. H&r block free tax file Kathleen must meet the convenience-of-the-employer test, even if her home qualifies as her principal place of business for deducting expenses for its use. H&r block free tax file Her employer provides her with an office and does not require her to work at home, so she does not meet the convenience-of-the-employer test and cannot claim a deduction for the business use of her home. H&r block free tax file More Than One Trade or Business The same home office can be the principal place of business for two or more separate business activities. H&r block free tax file Whether your home office is the principal place of business for more than one business activity must be determined separately for each of your trade or business activities. H&r block free tax file You must use the home office exclusively and regularly for one or more of the following purposes. H&r block free tax file As the principal place of business for one or more of your trades or businesses. H&r block free tax file As a place to meet or deal with patients, clients, or customers in the normal course of one or more of your trades or businesses. H&r block free tax file If your home office is a separate structure, in connection with one or more of your trades or businesses. H&r block free tax file You can use your home office for more than one business activity, but you cannot use it for any nonbusiness (i. H&r block free tax file e. H&r block free tax file , personal) activities. H&r block free tax file If you are an employee, any use of the home office in connection with your employment must be for the convenience of your employer. H&r block free tax file See Rental to employer , later, if you rent part of your home to your employer. H&r block free tax file Example. H&r block free tax file Tracy White is employed as a teacher. H&r block free tax file Her principal place of work is the school, which provides her office space to do her school work. H&r block free tax file She also has a mail order jewelry business. H&r block free tax file All her work in the jewelry business is done in her home office and the office is used exclusively for that business. H&r block free tax file If she meets all the other tests, she can deduct expenses for the business use of her home for the jewelry business. H&r block free tax file If Tracy also uses the office for work related to her teaching, she must meet the exclusive use test for both businesses to qualify for the deduction. H&r block free tax file As an employee, Tracy must also meet the convenience-of-the-employer test to qualify for the deduction. H&r block free tax file She does not meet this test for her work as a teacher, so she cannot claim a deduction for the business use of her home for either activity. H&r block free tax file Place To Meet Patients, Clients, or Customers If you meet or deal with patients, clients, or customers in your home in the normal course of your business, even though you also carry on business at another location, you can deduct your expenses for the part of your home used exclusively and regularly for business if you meet both the following tests. H&r block free tax file You physically meet with patients, clients, or customers on your premises. H&r block free tax file Their use of your home is substantial and integral to the conduct of your business. H&r block free tax file Doctors, dentists, attorneys, and other professionals who maintain offices in their homes generally will meet this requirement. H&r block free tax file Using your home for occasional meetings and telephone calls will not qualify you to deduct expenses for the business use of your home. H&r block free tax file The part of your home you use exclusively and regularly to meet patients, clients, or customers does not have to be your principal place of business. H&r block free tax file Example. H&r block free tax file June Quill, a self-employed attorney, works 3 days a week in her city office. H&r block free tax file She works 2 days a week in her home office used only for business. H&r block free tax file She regularly meets clients there. H&r block free tax file Her home office qualifies for a business deduction because she meets clients there in the normal course of her business. H&r block free tax file Separate Structure You can deduct expenses for a separate free-standing structure, such as a studio, workshop, garage, or barn, if you use it exclusively and regularly for your business. H&r block free tax file The structure does not have to be your principal place of business or a place where you meet patients, clients, or customers. H&r block free tax file Example. H&r block free tax file John Berry operates a floral shop in town. H&r block free tax file He grows the plants for his shop in a greenhouse behind his home. H&r block free tax file He uses the greenhouse exclusively and regularly in his business, so he can deduct the expenses for its use, subject to certain limitations, explained later. H&r block free tax file Figuring the Deduction After you determine that you meet the tests under Qualifying for a Deduction , you can begin to figure how much you can deduct. H&r block free tax file When figuring the amount you can deduct for the business use of your home, you will use either your actual expenses or a simplified method. H&r block free tax file Electing to use the simplified method. H&r block free tax file   The simplified method is an alternative to the calculation, allocation, and substantiation of actual expenses. H&r block free tax file You choose whether or not to figure your deduction using the simplified method each taxable year. H&r block free tax file See Using the Simplified Method , later. H&r block free tax file Rental to employer. H&r block free tax file   If you rent part of your home to your employer and you use the rented part in performing services for your employer as an employee, your deduction for the business use of your home is limited. H&r block free tax file You can deduct mortgage interest, qualified mortgage insurance premiums, real estate taxes, and personal casualty losses for the rented part, subject to any limitations. H&r block free tax file However, you cannot deduct otherwise allowable trade or business expenses, business casualty losses, or depreciation related to the use of your home (or use the simplified method as an alternative to deducting these actual expenses) in performing services for your employer. H&r block free tax file Using Actual Expenses If you do not or cannot elect to use the simplified method for a home, you will figure your deduction for that home using your actual expenses. H&r block free tax file You will also need to figure the percentage of your home used for business and the limit on the deduction. H&r block free tax file If you are an employee or a partner, or you use your home in your farming business and you file Schedule F (Form 1040), you can use the Worksheet To Figure the Deduction for Business Use of Your Home, near the end of this publication, to help you figure your deduction. H&r block free tax file If you use your home in a trade or business and you file Schedule C (Form 1040), you will use Form 8829 to figure your deduction. H&r block free tax file Part-year use. H&r block free tax file   You cannot deduct expenses for the business use of your home incurred during any part of the year you did not use your home for business purposes. H&r block free tax file For example, if you begin using part of your home for business on July 1, and you meet all the tests from that date until the end of the year, consider only your expenses for the last half of the year in figuring your allowable deduction. H&r block free tax file Expenses related to tax-exempt income. H&r block free tax file   Generally, you cannot deduct expenses that are related to tax-exempt allowances. H&r block free tax file However, if you receive a tax-exempt parsonage allowance or a tax-exempt military allowance, your expenses for mortgage interest and real estate taxes are deductible under the normal rules. H&r block free tax file No deduction is allowed for other expenses related to the tax-exempt allowance. H&r block free tax file   If your housing is provided free of charge and the value of the housing is tax exempt, you cannot deduct the rental value of any portion of the housing. H&r block free tax file Actual Expenses You must divide the expenses of operating your home between personal and business use. H&r block free tax file The part of a home operating expense you can use to figure your deduction depends on both of the following. H&r block free tax file Whether the expense is direct, indirect, or unrelated. H&r block free tax file The percentage of your home used for business. H&r block free tax file Table 1, next, describes the types of expenses you may have and the extent to which they are deductible. H&r block free tax file Table 1. H&r block free tax file Types of Expenses  Expense  Description  Deductibility Direct Expenses only for  the business part  of your home. H&r block free tax file Deductible in full. H&r block free tax file *   Examples:  Painting or repairs  only in the area  used for business. H&r block free tax file Exception: May be only partially  deductible in a daycare facility. H&r block free tax file See Daycare Facility , later. H&r block free tax file Indirect Expenses for  keeping up and running your  entire home. H&r block free tax file Deductible based on the percentage of your home used for business. H&r block free tax file *   Examples:  Insurance, utilities, and  general repairs. H&r block free tax file   Unrelated Expenses only for  the parts of your  home not used  for business. H&r block free tax file Not deductible. H&r block free tax file   Examples:  Lawn care or painting  a room not used  for business. H&r block free tax file   *Subject to the deduction limit, discussed later. H&r block free tax file Form 8829 and the Worksheet To Figure the Deduction for Business Use of Your Home have separate columns for direct and indirect expenses. H&r block free tax file Certain expenses are deductible whether or not you use your home for business. H&r block free tax file If you qualify to deduct business use of the home expenses, use the business percentage of these expenses to figure your total business use of the home deduction. H&r block free tax file These expenses include the following. H&r block free tax file Real estate taxes. H&r block free tax file Qualified mortgage insurance premiums. H&r block free tax file Deductible mortgage interest. H&r block free tax file Casualty losses. H&r block free tax file Other expenses are deductible only if you use your home for business. H&r block free tax file You can use the business percentage of these expenses to figure your total business use of the home deduction. H&r block free tax file These expenses generally include (but are not limited to) the following. H&r block free tax file Depreciation (covered under Depreciating Your Home , later). H&r block free tax file Insurance. H&r block free tax file Rent paid for the use of property you do not own but use in your trade or business. H&r block free tax file Repairs. H&r block free tax file Security system. H&r block free tax file Utilities and services. H&r block free tax file Real estate taxes. H&r block free tax file   To figure the business part of your real estate taxes, multiply the real estate taxes paid by the percentage of your home used for business. H&r block free tax file   For more information on the deduction for real estate taxes, see Publication 530, Tax Information for Homeowners. H&r block free tax file Deductible mortgage interest. H&r block free tax file   To figure the business part of your deductible mortgage interest, multiply this interest by the percentage of your home used for business. H&r block free tax file You can include interest on a second mortgage in this computation. H&r block free tax file If your total mortgage debt is more than $1,000,000 or your home equity debt is more than $100,000, your deduction may be limited. H&r block free tax file For more information on what interest is deductible, see Publication 936, Home Mortgage Interest Deduction. H&r block free tax file Qualified mortgage insurance premiums. H&r block free tax file   To figure the business part of your qualified mortgage insurance premiums, multiply the premiums by the percentage of your home used for business. H&r block free tax file You can include premiums for insurance on a second mortgage in this computation. H&r block free tax file If your adjusted gross income is more than $100,000 ($50,000 if your filing status is married filing separately), your deduction may be limited. H&r block free tax file For more information, see Publication 936, and Line 13 in the Instructions for Schedule A (Form 1040). H&r block free tax file Casualty losses. H&r block free tax file    If you have a casualty loss on your home that you use for business, treat the casualty loss as a direct expense, an indirect expense, or an unrelated expense, depending on the property affected. H&r block free tax file A direct expense is the loss on the portion of the property you use only in your business. H&r block free tax file Use the entire loss to figure the business use of the home deduction. H&r block free tax file An indirect expense is the loss on property you use for both business and personal purposes. H&r block free tax file Use only the business portion to figure the deduction. H&r block free tax file An unrelated expense is the loss on property you do not use in your business. H&r block free tax file Do not use any of the loss to figure the deduction. H&r block free tax file Example. H&r block free tax file You meet the rules to take a deduction for an office in your home that is 10% of the total area of your house. H&r block free tax file A storm damages your roof. H&r block free tax file This is an indirect expense as the roof is part of the whole house and is considered to be used both for business and personal purposes. H&r block free tax file You would complete Form 4684, Casualties and Thefts, to report your loss. H&r block free tax file You complete both section A (Personal Use Property) and section B (Business and Income-Producing Property) as your home is used both for business and personal purposes. H&r block free tax file Since you use 90% of your home for personal purposes, use 90% of the cost or adjusted basis of your home, insurance or other reimbursement, and fair market value, both before and after the storm, to figure the amounts to enter on lines 2, 3, 5, and 6 of Form 4684. H&r block free tax file Since you use 10% of your home for business purposes, use 10% of the cost or adjusted basis of your home, insurance or other reimbursement, and fair market value, both before and after the storm, to figure the amounts to enter on lines 20, 21, 23, and 24 of Form 4684. H&r block free tax file Forms and worksheets to use. H&r block free tax file   If you are filing Schedule C (Form 1040), get Form 8829 and follow the instructions for casualty losses. H&r block free tax file If you are an employee or a partner, or you file Schedule F (Form 1040), use the Worksheet To Figure the Deduction for Business Use of Your Home, near the end of this publication. H&r block free tax file You will also need to get Form 4684. H&r block free tax file More information. H&r block free tax file   For more information on casualty losses, see Publication 547, Casualties, Disasters, and Thefts. H&r block free tax file Insurance. H&r block free tax file   You can deduct the cost of insurance that covers the business part of your home. H&r block free tax file However, if your insurance premium gives you coverage for a period that extends past the end of your tax year, you can deduct only the business percentage of the part of the premium that gives you coverage for your tax year. H&r block free tax file You can deduct the business percentage of the part that applies to the following year in that year. H&r block free tax file Rent. H&r block free tax file   If you rent the home you occupy and meet the requirements for business use of the home, you can deduct part of the rent you pay. H&r block free tax file To figure your deduction, multiply your rent payments by the percentage of your home used for business. H&r block free tax file   If you own your home, you cannot deduct the fair rental value of your home. H&r block free tax file However, see Depreciating Your Home , later. H&r block free tax file Repairs. H&r block free tax file   The cost of repairs that relate to your business, including labor (other than your own labor), is a deductible expense. H&r block free tax file For example, a furnace repair benefits the entire home. H&r block free tax file If you use 10% of your home for business, you can deduct 10% of the cost of the furnace repair. H&r block free tax file   Repairs keep your home in good working order over its useful life. H&r block free tax file Examples of common repairs are patching walls and floors, painting, wallpapering, repairing roofs and gutters, and mending leaks. H&r block free tax file However, repairs are sometimes treated as a permanent improvement and are not deductible. H&r block free tax file See Permanent improvements , later, under Depreciating Your Home. H&r block free tax file Security system. H&r block free tax file   If you install a security system that protects all the doors and windows in your home, you can deduct the business part of the expenses you incur to maintain and monitor the system. H&r block free tax file You also can take a depreciation deduction for the part of the cost of the security system relating to the business use of your home. H&r block free tax file Utilities and services. H&r block free tax file   Expenses for utilities and services, such as electricity, gas, trash removal, and cleaning services, are primarily personal expenses. H&r block free tax file However, if you use part of your home for business, you can deduct the business part of these expenses. H&r block free tax file Generally, the business percentage for utilities is the same as the percentage of your home used for business. H&r block free tax file Telephone. H&r block free tax file   The basic local telephone service charge, including taxes, for the first telephone line into your home (i. H&r block free tax file e. H&r block free tax file , landline) is a nondeductible personal expense. H&r block free tax file However, charges for business long-distance phone calls on that line, as well as the cost of a second line into your home used exclusively for business, are deductible business expenses. H&r block free tax file Do not include these expenses as a cost of using your home for business. H&r block free tax file Deduct these charges separately on the appropriate form or schedule. H&r block free tax file For example, if you file Schedule C (Form 1040), deduct these expenses on line 25, Utilities (instead of line 30, Expenses for business use of your home). H&r block free tax file Depreciating Your Home If you own your home and qualify to deduct expenses for its business use, you can claim a deduction for depreciation. H&r block free tax file Depreciation is an allowance for the wear and tear on the part of your home used for business. H&r block free tax file You cannot depreciate the cost or value of the land. H&r block free tax file You recover its cost when you sell or otherwise dispose of the property. H&r block free tax file Before you figure your depreciation deduction, you need to know the following information. H&r block free tax file The month and year you started using your home for business. H&r block free tax file The adjusted basis and fair market value of your home (excluding land) at the time you began using it for business. H&r block free tax file The cost of any improvements before and after you began using the property for business. H&r block free tax file The percentage of your home used for business. H&r block free tax file See Business Percentage , later. H&r block free tax file Adjusted basis defined. H&r block free tax file   The adjusted basis of your home is generally its cost, plus the cost of any permanent improvements you made to it, minus any casualty losses or depreciation deducted in earlier tax years. H&r block free tax file For a discussion of adjusted basis, see Publication 551. H&r block free tax file Permanent improvements. H&r block free tax file   A permanent improvement increases the value of property, adds to its life, or gives it a new or different use. H&r block free tax file Examples of improvements are replacing electric wiring or plumbing, adding a new roof or addition, paneling, or remodeling. H&r block free tax file    You must carefully distinguish between repairs and improvements. H&r block free tax file See Repairs , earlier, under Actual Expenses. H&r block free tax file You also must keep accurate records of these expenses. H&r block free tax file These records will help you decide whether an expense is a deductible or a capital (added to the basis) expense. H&r block free tax file However, if you make repairs as part of an extensive remodeling or restoration of your home, the entire job is an improvement. H&r block free tax file Example. H&r block free tax file You buy an older home and fix up two rooms as a beauty salon. H&r block free tax file You patch the plaster on the ceilings and walls, paint, repair the floor, install an outside door, and install new wiring, plumbing, and other equipment. H&r block free tax file Normally, the patching, painting, and floor work are repairs and the other expenses are permanent improvements. H&r block free tax file However, because the work gives your property a new use, the entire remodeling job is a permanent improvement and its cost is added to the basis of the property. H&r block free tax file You cannot deduct any portion of it as a repair expense. H&r block free tax file Adjusting for depreciation deducted in earlier years. H&r block free tax file   Decrease the basis of your property by the depreciation you deducted, or could have deducted, on your tax returns under the method of depreciation you properly selected. H&r block free tax file If you deducted less depreciation than you could have under the method you selected, decrease the basis by the amount you could have deducted under that method. H&r block free tax file If you did not deduct any depreciation, decrease the basis by the amount you could have deducted. H&r block free tax file   If you deducted more depreciation than you should have, decrease your basis by the amount you should have deducted, plus the part of the excess depreciation you deducted that actually decreased your tax liability for any year. H&r block free tax file   If you deducted the incorrect amount of depreciation, see Publication 946. H&r block free tax file Fair market value defined. H&r block free tax file   The fair market value of your home is the price at which the property would change hands between a buyer and a seller, neither having to buy or sell, and both having reasonable knowledge of all necessary facts. H&r block free tax file Sales of similar property, on or about the date you begin using your home for business, may be helpful in determining the property's fair market value. H&r block free tax file Figuring the depreciation deduction for the current year. H&r block free tax file   If you began using your home for business before 2013, continue to use the same depreciation method you used in past tax years. H&r block free tax file   If you began using your home for business for the first time in 2013, depreciate the business part as nonresidential real property under the modified accelerated cost recovery system (MACRS). H&r block free tax file Under MACRS, nonresidential real property is depreciated using the straight line method over 39 years. H&r block free tax file For more information on MACRS and other methods of depreciation, see Publication 946. H&r block free tax file   To figure the depreciation deduction, you must first figure the part of the cost of your home that can be depreciated (depreciable basis). H&r block free tax file The depreciable basis is figured by multiplying the percentage of your home used for business by the smaller of the following. H&r block free tax file The adjusted basis of your home (excluding land) on the date you began using your home for business. H&r block free tax file The fair market value of your home (excluding land) on the date you began using your home for business. H&r block free tax file Depreciation table. H&r block free tax file   If 2013 was the first year you used your home for business, you can figure your 2013 depreciation for the business part of your home by using the appropriate percentage from the following table. H&r block free tax file Table 2. H&r block free tax file MACRS Percentage Table for 39-Year Nonresidential Real Property Month First Used for Business Percentage To Use 1 2. H&r block free tax file 461% 2 2. H&r block free tax file 247% 3 2. H&r block free tax file 033% 4 1. H&r block free tax file 819% 5 1. H&r block free tax file 605% 6 1. H&r block free tax file 391% 7 1. H&r block free tax file 177% 8 0. H&r block free tax file 963% 9 0. H&r block free tax file 749% 10 0. H&r block free tax file 535% 11 0. H&r block free tax file 321% 12 0. H&r block free tax file 107%   Multiply the depreciable basis of the business part of your home by the percentage from the table for the first month you use your home for business. H&r block free tax file See Publication 946 for the percentages for the remaining tax years of the recovery period. H&r block free tax file Example. H&r block free tax file In May, George Miller began to use one room in his home exclusively and regularly to meet clients. H&r block free tax file This room is 8% of the square footage of his home. H&r block free tax file He bought the home in 2003 for $125,000. H&r block free tax file He determined from his property tax records that his adjusted basis in the house (exclusive of land) is $115,000. H&r block free tax file In May, the house had a fair market value of $165,000. H&r block free tax file He multiplies his adjusted basis of $115,000 (which is less than the fair market value) by 8%. H&r block free tax file The result is $9,200, his depreciable basis for the business part of the house. H&r block free tax file George files his return based on the calendar year. H&r block free tax file May is the 5th month of his tax year. H&r block free tax file He multiplies his depreciable basis of $9,200 by 1. H&r block free tax file 605% (. H&r block free tax file 01605), the percentage from the table for the 5th month. H&r block free tax file His depreciation deduction is $147. H&r block free tax file 66. H&r block free tax file Depreciating permanent improvements. H&r block free tax file   Add the costs of permanent improvements made before you began using your home for business to the basis of your property. H&r block free tax file Depreciate these costs as part of the cost of your home as explained earlier. H&r block free tax file The costs of improvements made after you begin using your home for business (that affect the business part of your home, such as a new roof) are depreciated separately. H&r block free tax file Multiply the cost of the improvement by the business-use percentage and depreciate the result over the recovery period that would apply to your home if you began using it for business at the same time as the improvement. H&r block free tax file For improvements made this year, the recovery period is 39 years. H&r block free tax file For the percentage to use for the first year, see Table 2, earlier. H&r block free tax file For more information on recovery periods, see Publication 946. H&r block free tax file Business Percentage To find the business percentage, compare the size of the part of your home that you use for business to your whole house. H&r block free tax file Use the resulting percentage to figure the business part of the expenses for operating your entire home. H&r block free tax file You can use any reasonable method to determine the business percentage. H&r block free tax file The following are two commonly used methods for figuring the percentage. H&r block free tax file Divide the area (length multiplied by the width) used for business by the total area of your home. H&r block free tax file If the rooms in your home are all about the same size, you can divide the number of rooms used for business by the total number of rooms in your home. H&r block free tax file Example 1. H&r block free tax file Your office is 240 square feet (12 feet × 20 feet). H&r block free tax file Your home is 1,200 square feet. H&r block free tax file Your office is 20% (240 ÷ 1,200) of the total area of your home. H&r block free tax file Your business percentage is 20%. H&r block free tax file Example 2. H&r block free tax file You use one room in your home for business. H&r block free tax file Your home has 10 rooms, all about equal size. H&r block free tax file Your office is 10% (1 ÷ 10) of the total area of your home. H&r block free tax file Your business percentage is 10%. H&r block free tax file Use lines 1-7 of Form 8829, or lines 1-3 on the Worksheet To Figure the Deduction for Business Use of Your Home (near the end of this publication) to figure your business percentage. H&r block free tax file Deduction Limit If your gross income from the business use of your home equals or exceeds your total business expenses (including depreciation), you can deduct all your business expenses related to the use of your home. H&r block free tax file If your gross income from the business use of your home is less than your total business expenses, your deduction for certain expenses for the business use of your home is limited. H&r block free tax file Your deduction of otherwise nondeductible expenses, such as insurance, utilities, and depreciation of your home (with depreciation of your home taken last), that are allocable to the business, is limited to the gross income from the business use of your home minus the sum of the following. H&r block free tax file The business part of expenses you could deduct even if you did not use your home for business (such as mortgage interest, real estate taxes, and casualty and theft losses that are allowable as itemized deductions on Schedule A (Form 1040)). H&r block free tax file These expenses are discussed in detail under Actual Expenses , earlier. H&r block free tax file The business expenses that relate to the business activity in the home (for example, business phone, supplies, and depreciation on equipment), but not to the use of the home itself. H&r block free tax file If you are self-employed, do not include in (2) above your deduction for one-half of your self-employment tax. H&r block free tax file Carryover of unallowed expenses. H&r block free tax file   If your deductions are greater than the current year's limit, you can carry over the excess to the next year in which you use actual expenses. H&r block free tax file They are subject to the deduction limit for that year, whether or not you live in the same home during that year. H&r block free tax file Figuring the deduction limit and carryover. H&r block free tax file   If you are an employee or a partner, or you file Schedule F (Form 1040), use the Worksheet To Figure the Deduction for Business Use of Your Home, near the end of this publication. H&r block free tax file If you file Schedule C (Form 1040), figure your deduction limit and carryover on Form 8829. H&r block free tax file Example. H&r block free tax file You meet the requirements for deducting expenses for the business use of your home. H&r block free tax file You use 20% of your home for business. H&r block free tax file In 2013, your business expenses and the expenses for the business use of your home are deducted from your gross income in the following order. H&r block free tax file    Gross income from business $6,000 Minus:   Deductible mortgage interest and real estate taxes (20%) 3,000 Business expenses not related to the use of your home (100%) (business phone, supplies, and depreciation on equipment) 2,000 Deduction limit $1,000 Minus other expenses allocable to business use of home:   Maintenance, insurance, and utilities (20%) 800 Depreciation allowed (20% = $1,600 allowable, but subject to balance of deduction limit) 200 Other expenses up to the deduction limit $1,000 Depreciation carryover to 2014 ($1,600 − $200) (subject to deduction limit in 2014) $1,400   You can deduct all of the business part of your deductible mortgage interest and real estate taxes ($3,000). H&r block free tax file You also can deduct all of your business expenses not related to the use of your home ($2,000). H&r block free tax file Additionally, you can deduct all of the business part of your expenses for maintenance, insurance, and utilities, because the total ($800) is less than the $1,000 deduction limit. H&r block free tax file Your deduction for depreciation for the business use of your home is limited to $200 ($1,000 minus $800) because of the deduction limit. H&r block free tax file You can carry over the $1,400 balance and add it to your depreciation for 2014, subject to your deduction limit in 2014. H&r block free tax file More than one place of business. H&r block free tax file   If part of the gross income from your trade or business is from the business use of part of your home and part is from a place other than your home, you must determine the part of your gross income from the business use of your home before you figure the deduction limit. H&r block free tax file In making this determination, consider the time you spend at each location, the business investment in each location, and any other relevant facts and circumstances. H&r block free tax file If your home office qualifies as your principal place of business, you can deduct your daily transportation costs between your home and another work location in the same trade or business. H&r block free tax file For more information on transportation costs, see Publication 463, Travel, Entertainment, Gift, and Car Expenses. H&r block free tax file Using the Simplified Method The simplified method is an alternative to the calculation, allocation, and substantiation of actual expenses. H&r block free tax file In most cases, you will figure your deduction by multiplying $5, the prescribed rate, by the area of your home used for a qualified business use. H&r block free tax file The area you use to figure your deduction is limited to 300 square feet. H&r block free tax file See Simplified Amount , later, for information about figuring the amount of the deduction. H&r block free tax file For more information about the simplified method, see Revenue Procedure 2013-13, 2013-06 I. H&r block free tax file R. H&r block free tax file B. H&r block free tax file 478, available at www. H&r block free tax file irs. H&r block free tax file gov/irb/2013-06_IRB/ar09. H&r block free tax file html. H&r block free tax file Actual expenses and depreciation of your home. H&r block free tax file   If you elect to use the simplified method, you cannot deduct any actual expenses for the business except for business expenses that are not related to the use of the home. H&r block free tax file You also cannot deduct any depreciation (including any additional first-year depreciation) or section 179 expense for the portion of the home that is used for a qualified business use. H&r block free tax file The depreciation deduction allowable for that portion of the home is deemed to be zero for a year you use the simplified method. H&r block free tax file If you figure your deduction for business use of the home using actual expenses in a subsequent year, you will have to use the appropriate optional depreciation table for MACRS to figure your depreciation. H&r block free tax file More information. H&r block free tax file   For more information about claiming depreciation in a subsequent year, see Revenue Procedure 2013-13, 2013-06 I. H&r block free tax file R. H&r block free tax file B. H&r block free tax file 478, available at www. H&r block free tax file irs. H&r block free tax file gov/irb/2013-06_IRB/ar09. H&r block free tax file html. H&r block free tax file See Publication 946 for the optional depreciation tables Although you cannot deduct any depreciation or section 179 expense for the portion of your home used for a qualified business use, you may still claim depreciation or the section 179 expense deduction on other assets used in the business (for example, furniture and equipment). H&r block free tax file Expenses deductible without regard to business use. H&r block free tax file   When using the simplified method, treat as personal expenses those business expenses related to the use of the home that are deductible without regard to whether there is a qualified business use of the home. H&r block free tax file These expenses include mortgage interest, real estate taxes, and casualty losses, subject to any limitations. H&r block free tax file See Where To Deduct , later. H&r block free tax file If you also rent part of your home, you must still allocate these expenses between rental use and personal use (for this purpose, personal use includes business use reported using the simplified method). H&r block free tax file No deduction of carryover of actual expenses. H&r block free tax file   If you used actual expenses to figure your deduction for business use of the home in a prior year and your deduction was limited, you cannot deduct the disallowed amount carried over from the prior year during a year you figure your deduction using the simplified method. H&r block free tax file Instead, you will continue to carry over the disallowed amount to the next year that you use actual expenses to figure your deduction. H&r block free tax file Electing the Simplified Method You choose whether or not to figure your deduction using the simplified method each taxable year. H&r block free tax file Make the election for a home by using the simplified method to figure the deduction for the qualified business use of that home on a timely filed, original federal income tax return. H&r block free tax file An election for a taxable year, once made, is irrevocable. H&r block free tax file A change from using the simplified method in one year to actual expenses in a succeeding taxable year, or vice-versa, is not a change in method of accounting and does not require the consent of the Commissioner. H&r block free tax file Shared use. H&r block free tax file   If you share your home with someone else who also uses the home in a business that qualifies for this deduction, each of you make your own election. H&r block free tax file More than one qualified business use. H&r block free tax file   If you conduct more than one business that qualifies for this deduction in your home, your election to use the simplified method applies to all your qualified business uses of that home. H&r block free tax file More than one home. H&r block free tax file   If you used more than one home during the year (for example, you moved during the year), you can elect to use the simplified method for only one of the homes. H&r block free tax file You must figure the deduction for any other home using actual expenses. H&r block free tax file Simplified Amount Your deduction for the qualified business use of a home is the sum of each amount you figure for a separate qualified business use of your home. H&r block free tax file To figure your deduction for the business use of a home using the simplified method, you will need to know the following information for each qualified business use of the home. H&r block free tax file The allowable area of your home used in conducting the business. H&r block free tax file If you did not conduct the business for the entire year in the home or the area changed during the year, you will need to know the allowable area you used and the number of days you conducted the business for each month. H&r block free tax file The gross income from the business use of your home. H&r block free tax file The amount of the business expenses that are not related to the use of your home. H&r block free tax file If the qualified business use is for a daycare facility that uses space in your home on a regular (but not exclusive) basis, you will also need to know the percentage of time that part of your home is used for daycare. H&r block free tax file To figure the amount you can deduct for qualified business use of your home using the simplified method, follow these 3 steps. H&r block free tax file Multiply the allowable area by $5 (or less than $5 if the qualified business use is for a daycare that uses space in your home on a regular, but not exclusive, basis). H&r block free tax file See Allowable area and Space used regularly for daycare , later. H&r block free tax file Subtract the expenses from the business that are not related to the use of the home from the gross income related to the business use of the home. H&r block free tax file If these expenses are greater than the gross income from the business use of the home, then you cannot take a deduction for this business use of the home. H&r block free tax file See Gross income limitation , later. H&r block free tax file Take the smaller of the amounts from (1) and (2). H&r block free tax file This is the amount you can deduct for this qualified business use of your home using the simplified method. H&r block free tax file If you are an employee or a partner, or you use your home in your farming business and file Schedule F (Form 1040), you can use the Simplified Method Worksheet, near the end of this publication, to help you figure your deduction. H&r block free tax file If you use your home in a trade or business and you file Schedule C (Form 1040), you will use the Simplified Method Worksheet in your Instructions for Schedule C to figure your deduction. H&r block free tax file Allowable area. H&r block free tax file   In most cases, the allowable area is the smaller of the actual area (in square feet) of your home used in conducting the business and 300 square feet. H&r block free tax file Your allowable area may be smaller if you conducted the business as a qualified joint venture with your spouse, the area used by the business was shared with another qualified business use, you used the home for the business for only part of the year, or the area used by the business changed during the year. H&r block free tax file You can use the Area Adjustment Worksheet (for simplified method), near the end of this publication, to help you figure your allowable area for a qualified business use. H&r block free tax file Area used by a qualified joint venture. H&r block free tax file   If the qualified business use of the home is also a qualified joint venture, you and your spouse will figure the deduction for the business use separately. H&r block free tax file Split the actual area used in conducting business between you and your spouse in the same manner you split your other tax attributes. H&r block free tax file Then, each spouse will figure the allowable area separately. H&r block free tax file For more information about qualified joint ventures, see Qualified Joint Venture in the Instructions for Schedule C. H&r block free tax file Shared use. H&r block free tax file   If you share your home with someone else who uses the home to conduct business that also qualifies for this deduction, you may not include the same square feet to figure your deduction as the other person. H&r block free tax file You must allocate the shared space between you and the other person in a reasonable manner. H&r block free tax file Example. H&r block free tax file Kristin and Lindsey are roommates. H&r block free tax file Kristin uses 300 square feet of their home for a qualified business use. H&r block free tax file Lindsey uses 200 square feet of their home for a separate qualified business use. H&r block free tax file The qualified business uses share 100 square feet. H&r block free tax file In addition to the portion that they do not share, Kristin and Lindsey can both claim 50 of the 100 square feet or divide the 100 square feet between them in any reasonable manner. H&r block free tax file If divided evenly, Kristin could claim 250 square feet using the simplified method and Lindsey could claim 150 square feet. H&r block free tax file More than one qualified business use. H&r block free tax file   If you conduct more than one business qualifying for the deduction, you are limited to a maximum of 300 square feet for all of the businesses. H&r block free tax file Allocate the actual square footage used (up to the maximum of 300 square feet) among your qualified business uses in a reasonable manner. H&r block free tax file However, do not allocate more square feet to a qualified business use than you actually use for that business. H&r block free tax file Rental use. H&r block free tax file   The simplified method does not apply to rental use. H&r block free tax file A rental use that qualifies for the deduction must be figured using actual expenses. H&r block free tax file If the rental use and a qualified business use share the same area, you will have to allocate the actual area used between the two uses. H&r block free tax file You cannot use the same area to figure a deduction for the qualified business use as you are using to figure the deduction for the rental use. H&r block free tax file Part-year use or area changes. H&r block free tax file   If your qualified business use was for a portion of the taxable year (for example, a seasonal business or a business that begins during the taxable year) or you changed the square footage of your qualified business use, your deduction is limited to the average monthly allowable square footage. H&r block free tax file You calculate the average monthly allowable square footage by adding the amount of allowable square feet you used in each month and dividing the sum by 12. H&r block free tax file When determining the average monthly allowable square footage, you cannot take more than 300 square feet into account for any one month. H&r block free tax file Additionally, if your qualified business use was less than 15 days in a month, you must use -0- for that month. H&r block free tax file Example 1. H&r block free tax file Andy files his federal income tax return on a calendar year basis. H&r block free tax file On July 20, he began using 420 square feet of his home for a qualified business use. H&r block free tax file He continued to use the 420 square feet until the end of the year. H&r block free tax file His average monthly allowable square footage is 125 square feet, which is figured using 300 square feet for each month August through December divided by the number of months in the taxable year ((0 + 0 + 0 + 0 + 0 + 0 + 0 + 300 + 300 + 300 + 300 + 300)/12). H&r block free tax file Example 2. H&r block free tax file Amy files her federal income tax return on a calendar year basis. H&r block free tax file On April 20, she began using 100 square feet of her home for a qualified business use. H&r block free tax file On August 5, she expanded the area of her qualified use to 330 square feet. H&r block free tax file Amy continued to use the 330 square feet until the end of the year. H&r block free tax file Her average monthly allowable square footage is 150 square feet, which is figured using 100 square feet for May through July and 300 square feet for August through December divided by the number of months in the taxable year ((0 + 0 + 0 + 0 + 100 + 100 +100 + 300 + 300 + 300 + 300 + 300)/12). H&r block free tax file Gross income limitation. H&r block free tax file   Your deduction for business use of the home is limited to an amount equal to the gross income derived from the qualified business use of the home reduced by the business deductions that are unrelated to the use of your home. H&r block free tax file If the business deductions that are unrelated to the use of your home are greater than the gross income derived from the qualified business use of your home, then you cannot take a deduction for this qualified business use of your home. H&r block free tax file Business expenses not related to use of the home. H&r block free tax file   These expenses relate to the business activity in the home, but not to the use of the home itself. H&r block free tax file You can still deduct business expenses that are unrelated to the use of the home. H&r block free tax file See Where To Deduct , later. H&r block free tax file Examples of business expenses that are unrelated to the use of the home are advertising, wages, supplies, dues, and depreciation for equipment. H&r block free tax file Space used regularly for daycare. H&r block free tax file   If you do not use the area of your home exclusively for daycare, you must reduce the prescribed rate (maximum $5 per square foot) before figuring your deduction. H&r block free tax file The reduced rate will equal the prescribed rate times a fraction. H&r block free tax file The numerator of the fraction is the number of hours that the space was used during the year for daycare and the denominator is the total number of hours during the year that the space was available for all uses. H&r block free tax file You can use the Daycare Facility Worksheet (for simplified method), near the end of this publication, to help you figure the reduced rate. H&r block free tax file    If you used at least 300 square feet for daycare regularly and exclusively during the year, then you do not need to reduce the prescribed rate or complete the Daycare Facility Worksheet. H&r block free tax file Daycare Facility If you use space in your home on a regular basis for providing daycare, you may be able to claim a deduction for that part of your home even if you use the same space for nonbusiness purposes. H&r block free tax file To qualify for this exception to the exclusive use rule, you must meet both of the following requirements. H&r block free tax file You must be in the trade or business of providing daycare for children, persons age 65 or older, or persons who are physically or mentally unable to care for themselves. H&r block free tax file You must have applied for, been granted, or be exempt from having, a license, certification, registration, or approval as a daycare center or as a family or group daycare home under state law. H&r block free tax file You do not meet this requirement if your application was rejected or your license or other authorization was revoked. H&r block free tax file Figuring the deduction. H&r block free tax file   If you elect to use the simplified method for your home, figure your deduction as described earlier in Using the Simplified Method under Figuring the Deduction. H&r block free tax file    If you are figuring your deduction using actual expenses and you regularly use part of your home for daycare, figure what part is used for daycare, as explained in Business Percentage , earlier, under Figuring the Deduction. H&r block free tax file If you also use that part exclusively for daycare, deduct all the allocable expenses, subject to the deduction limit, as explained earlier. H&r block free tax file   If the use of part of your home as a daycare facility is regular, but not exclusive, you must figure the percentage of time that part of your home is used for daycare. H&r block free tax file A room that is available for use throughout each business day and that you regularly use in your business is considered to be used for daycare throughout each business day. H&r block free tax file You do not have to keep records to show the specific hours the area was used for business. H&r block free tax file You can use the area occasionally for personal reasons. H&r block free tax file However, a room you use only occasionally for business does not qualify for the deduction. H&r block free tax file To find the percentage of time you actually use your home for business, compare the total time used for business to the total time that part of your home can be used for all purposes. H&r block free tax file You can compare the hours of business use in a week with the number of hours in a week (168). H&r block free tax file Or you can compare the hours of business use for the year with the number of hours in the year (8,760 in 2013). H&r block free tax file If you started or stopped using your home for daycare in 2013, you must prorate the number of hours based on the number of days the home was available for daycare. H&r block free tax file Example 1. H&r block free tax file Mary Lake used her basement to operate a daycare business for children. H&r block free tax file She figures the business percentage of the basement as follows. H&r block free tax file Square footage of the basement Square footage of her home = 1,600 3,200 = 50%           She used the basement for daycare an average of 12 hours a day, 5 days a week, for 50 weeks a year. H&r block free tax file During the other 12 hours a day, the family could use the basement. H&r block free tax file She figures the percentage of time the basement was used for daycare as follows. H&r block free tax file Number of hours used for daycare (12 x 5 x 50) Total number of hours in the year (24 x 365) = 3,000 8,760 = 34. H&r block free tax file 25%           Mary can deduct 34. H&r block free tax file 25% of any direct expenses for the basement. H&r block free tax file However, because her indirect expenses are for the entire house, she can deduct only 17. H&r block free tax file 13% of the indirect expenses. H&r block free tax file She figures the percentage for her indirect expenses as follows. H&r block free tax file Business percentage of the basement 50% Multiplied by: Percentage of time used for daycare × 34. H&r block free tax file 25% Percentage for indirect expenses 17. H&r block free tax file 13% Mary completes Form 8829, Part I, figuring the percentage of her home used for business, including the percentage of time the basement was used. H&r block free tax file In Part II, Mary figures her deductible expenses. H&r block free tax file She uses the following information to complete Part II. H&r block free tax file Gross income from her daycare business $50,000 Expenses not related to the business use of the home $25,000 Tentative profit $25,000 Rent $8,400 Utilities $850 Painting the basement $500 Mary enters her tentative profit, $25,000, on line 8. H&r block free tax file (This figure is the same as the amount on line 29 of her Schedule C (Form 1040). H&r block free tax file ) The expenses she paid for rent and utilities relate to her entire home. H&r block free tax file Therefore, she enters the amount paid for rent on line 18, column (b), and the amount paid for utilities on line 20, column (b). H&r block free tax file She shows the total of these expenses on line 22, column (b). H&r block free tax file For line 23, she multiplies the amount on line 22, column (b) by the percentage on line 7 and enters the result, $1,585. H&r block free tax file Mary paid $500 to have the basement painted. H&r block free tax file The painting is a direct expense. H&r block free tax file However, because she did not use the basement exclusively for daycare, she must multiply $500 by the percentage of time the basement was used for daycare (34. H&r block free tax file 25% – line 6). H&r block free tax file She enters $171 (34. H&r block free tax file 25% × $500) on line 19, column (a). H&r block free tax file She adds line 22, column (a), and line 23 and enters $1,756 ($171 + $1,585) on line 25. H&r block free tax file This is less than her deduction limit (line 15), so she can deduct the entire amount. H&r block free tax file She follows the instructions to complete the rest of Part II and enters $1,756 on lines 33 and 35. H&r block free tax file She then carries the $1,756 to line 30 of her Schedule C (Form 1040). H&r block free tax file Example 2. H&r block free tax file Assume the same facts as in Example 1 except that Mary also has another room that was available each business day for children to take naps in. H&r block free tax file Although she did not keep a record of the number of hours the room was actually used for naps, it was used for part of each business day. H&r block free tax file Since the room was available for business use during regular operating hours each business day and was used regularly in the business, it is considered used for daycare throughout each business day. H&r block free tax file The basement and room are 60% of the total area of her home. H&r block free tax file In figuring her expenses, 34. H&r block free tax file 25% of any direct expenses for the basement and room are deductible. H&r block free tax file In addition, 20. H&r block free tax file 55% (34. H&r block free tax file 25% × 60%) of her indirect expenses are deductible. H&r block free tax file Example 3. H&r block free tax file Assume the same facts as in Example 1 except that Mary stopped using her home for a daycare facility on June 24, 2013. H&r block free tax file She used the basement for daycare an average of 12 hours a day, 5 days a week, but for only 25 weeks of the year. H&r block free tax file During the other 12 hours a day, the family could still use the basement. H&r block free tax file She figures the percentage of time the basement was used for business as follows. H&r block free tax file Number of hours used for daycare (12 x 5 x 25) Total number of hours during period used (24 x 175) = 1,500 4,200 = 35. H&r block free tax file 71%           Mary can deduct 35. H&r block free tax file 71% of any direct expenses for the basement. H&r block free tax file However, because her indirect expenses are for the entire house, she can deduct only 17. H&r block free tax file 86% of the indirect expenses. H&r block free tax file She figures the percentage for her indirect expenses as follows. H&r block free tax file Business percentage of the basement 50% Multiplied by: Percentage of time used for daycare × 35. H&r block free tax file 71% Percentage for indirect expenses 17. H&r block free tax file 86% Meals. H&r block free tax file   If you provide food for your daycare recipients, do not include the expense as a cost of using your home for business. H&r block free tax file Claim it as a separate deduction on your Schedule C (Form 1040). H&r block free tax file You can never deduct the cost of food consumed by you or your family. H&r block free tax file You can deduct as a business expense 100% of the actual cost of food consumed by your daycare recipients (see Standard meal and snack rates , later, for an optional method for eligible children) and generally only 50% of the cost of food consumed by your employees. H&r block free tax file However, you can deduct 100% of the cost of food consumed by your employees if its value can be excluded from their wages as a de minimis fringe benefit. H&r block free tax file For more information on meals that meet these requirements, see Meals in chapter 2 of Publication 15-B, Employer's Tax Guide to Fringe Benefits. H&r block free tax file   If you deduct the actual cost of food for your daycare business, keep a separate record (with receipts) of your family's food costs. H&r block free tax file   Reimbursements you receive from a sponsor under the Child and Adult Care Food Program of the Department of Agriculture are taxable only to the extent they exceed your expenses for food for eligible children. H&r block free tax file If your reimbursements are more than your expenses for food, show the difference as income in Part I of Schedule C (Form 1040). H&r block free tax file If your food expenses are greater than the reimbursements, show the difference as an expense in Part V of Schedule C (Form 1040). H&r block free tax file Do not include payments or expenses for your own children if they are eligible for the program. H&r block free tax file Follow this procedure even if you receive a Form 1099-MISC, Miscellaneous Income, reporting a payment from the sponsor. H&r block free tax file Standard meal and snack rates. H&r block free tax file   If you qualify as a family daycare provider, you can use the standard meal and snack rates, instead of actual costs, to compute the deductible cost of meals and snacks provided to eligible children. H&r block free tax file For these purposes: A family daycare provider is a person engaged in the business of providing family daycare. H&r block free tax file Family daycare is childcare provided to eligible children in the home of the family daycare provider. H&r block free tax file The care must be non-medical, not involve a transfer of legal custody, and generally last less than 24 hours each day. H&r block free tax file Eligible children are minor children receiving family daycare in the home of the family daycare provider. H&r block free tax file Eligible children do not include children who are full-time or part-time residents in the home where the childcare is provided or children whose parents or guardians are residents of the same home. H&r block free tax file Eligible children do not include children who receive daycare services for personal reasons of the provider. H&r block free tax file For example, if a provider provides daycare services for a relative as a favor to that relative, that child is not an eligible child. H&r block free tax file   You can compute the deductible cost of each meal and snack you actually purchased and served to an eligible child during the time period you provided family daycare using the standard meal and snack rates shown in Table 3, later. H&r block free tax file You can use the standard meal and snack rates for a maximum of one breakfast, one lunch, one dinner, and three snacks per eligible child per day. H&r block free tax file If you receive reimbursement for a particular meal or snack, you can deduct only the portion of the applicable standard meal or snack rate that is more than the amount of the reimbursement. H&r block free tax file   You can use either the standard meal and snack rates or actual costs to calculate the deductible cost of food provided to eligible children in the family daycare for any particular tax year. H&r block free tax file If you choose to use the standard meal and snack rates for a particular tax year, you must use the rates for all your deductible food costs for eligible children during that tax year. H&r block free tax file However, if you use the standard meal and snack rates in any tax year, you can use actual costs to compute the deductible cost of food in any other tax year. H&r block free tax file   If you use the standard meal and snack rates, you must maintain records to substantiate the computation of the total amount deducted for the cost of food provided to eligible children. H&r block free tax file The records kept should include the name of each child, dates and hours of attendance in the daycare, and the type and quantity of meals and snacks served. H&r block free tax file This information can be recorded in a log similar to the one shown in Exhibit A, near the end of this publication. H&r block free tax file   The standard meal and snack rates include beverages, but do not include non-food supplies used for food preparation, service, or storage, such as containers, paper products, or utensils. H&r block free tax file These expenses can be claimed as a separate deduction on your Schedule C (Form 1040). H&r block free tax file     Table 3. H&r block free tax file Standard Meal and Snack Rates1 Location of Family Daycare Provider Breakfast Lunch Dinner Snack States other than Alaska an