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Irs Amended Return Instructions

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Irs Amended Return Instructions

Irs amended return instructions 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. Irs amended return instructions 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. Irs amended return instructions However, you may be able to deduct expenses related to the business use of part of your home if you meet specific requirements. Irs amended return instructions Even then, the deductible amount of these types of expenses may be limited. Irs amended return instructions Use this section and Figure A, later, to decide if you can deduct expenses for the business use of your home. Irs amended return instructions 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). Irs amended return instructions Additional tests for employee use. Irs amended return instructions   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. Irs amended return instructions 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. Irs amended return instructions If the use of the home office is merely appropriate and helpful, you cannot deduct expenses for the business use of your home. Irs amended return instructions Exclusive Use To qualify under the exclusive use test, you must use a specific area of your home only for your trade or business. Irs amended return instructions The area used for business can be a room or other separately identifiable space. Irs amended return instructions The space does not need to be marked off by a permanent partition. Irs amended return instructions 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. Irs amended return instructions Example. Irs amended return instructions You are an attorney and use a den in your home to write legal briefs and prepare clients' tax returns. Irs amended return instructions Your family also uses the den for recreation. Irs amended return instructions The den is not used exclusively in your trade or business, so you cannot claim a deduction for the business use of the den. Irs amended return instructions Exceptions to Exclusive Use You do not have to meet the exclusive use test if either of the following applies. Irs amended return instructions You use part of your home for the storage of inventory or product samples (discussed next). Irs amended return instructions You use part of your home as a daycare facility, discussed later under Daycare Facility . Irs amended return instructions Note. Irs amended return instructions With the exception of these two uses, any portion of the home used for business purposes must meet the exclusive use test. Irs amended return instructions Storage of inventory or product samples. Irs amended return instructions    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. Irs amended return instructions However, you must meet all the following tests. Irs amended return instructions You sell products at wholesale or retail as your trade or business. Irs amended return instructions You keep the inventory or product samples in your home for use in your trade or business. Irs amended return instructions Your home is the only fixed location of your trade or business. Irs amended return instructions You use the storage space on a regular basis. Irs amended return instructions The space you use is a separately identifiable space suitable for storage. Irs amended return instructions Example. Irs amended return instructions Your home is the only fixed location of your business of selling mechanics' tools at retail. Irs amended return instructions You regularly use half of your basement for storage of inventory and product samples. Irs amended return instructions You sometimes use the area for personal purposes. Irs amended return instructions The expenses for the storage space are deductible even though you do not use this part of your basement exclusively for business. Irs amended return instructions Regular Use To qualify under the regular use test, you must use a specific area of your home for business on a regular basis. Irs amended return instructions Incidental or occasional business use is not regular use. Irs amended return instructions You must consider all facts and circumstances in determining whether your use is on a regular basis. Irs amended return instructions 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. Irs amended return instructions 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. Irs amended return instructions Example. Irs amended return instructions 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. Irs amended return instructions You do not make investments as a broker or dealer. Irs amended return instructions So, your activities are not part of a trade or business and you cannot take a deduction for the business use of your home. Irs amended return instructions Principal Place of Business You can have more than one business location, including your home, for a single trade or business. Irs amended return instructions 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. Irs amended return instructions 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. Irs amended return instructions Your home office will qualify as your principal place of business if you meet the following requirements. Irs amended return instructions You use it exclusively and regularly for administrative or management activities of your trade or business. Irs amended return instructions You have no other fixed location where you conduct substantial administrative or management activities of your trade or business. Irs amended return instructions If, after considering your business locations, your home cannot be identified as your principal place of business, you cannot deduct home office expenses. Irs amended return instructions 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. Irs amended return instructions Administrative or management activities. Irs amended return instructions   There are many activities that are administrative or managerial in nature. Irs amended return instructions The following are a few examples. Irs amended return instructions Billing customers, clients, or patients. Irs amended return instructions Keeping books and records. Irs amended return instructions Ordering supplies. Irs amended return instructions Setting up appointments. Irs amended return instructions Forwarding orders or writing reports. Irs amended return instructions Administrative or management activities performed at other locations. Irs amended return instructions   The following activities performed by you or others will not disqualify your home office from being your principal place of business. Irs amended return instructions You have others conduct your administrative or management activities at locations other than your home. Irs amended return instructions (For example, another company does your billing from its place of business. Irs amended return instructions ) 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. Irs amended return instructions You occasionally conduct minimal administrative or management activities at a fixed location outside your home. Irs amended return instructions You conduct substantial nonadministrative or nonmanagement business activities at a fixed location outside your home. Irs amended return instructions (For example, you meet with or provide services to customers, clients, or patients at a fixed location of the business outside your home. Irs amended return instructions ) You have suitable space to conduct administrative or management activities outside your home, but choose to use your home office for those activities instead. Irs amended return instructions Please click here for the text description of the image. Irs amended return instructions Can you deduct business use of the home expenses? Example 1. Irs amended return instructions John is a self-employed plumber. Irs amended return instructions Most of John's time is spent at customers' homes and offices installing and repairing plumbing. Irs amended return instructions 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. Irs amended return instructions John writes up estimates and records of work completed at his customers' premises. Irs amended return instructions He does not conduct any substantial administrative or management activities at any fixed location other than his home office. Irs amended return instructions John does not do his own billing. Irs amended return instructions He uses a local bookkeeping service to bill his customers. Irs amended return instructions John's home office qualifies as his principal place of business for deducting expenses for its use. Irs amended return instructions 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. Irs amended return instructions His choice to have his billing done by another company does not disqualify his home office from being his principal place of business. Irs amended return instructions 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. Irs amended return instructions Example 2. Irs amended return instructions Pamela is a self-employed sales representative for several different product lines. Irs amended return instructions 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. Irs amended return instructions She occasionally writes up orders and sets up appointments from her hotel room when she is away on business overnight. Irs amended return instructions Pamela's business is selling products to customers at various locations throughout her territory. Irs amended return instructions To make these sales, she regularly visits customers to explain the available products and take orders. Irs amended return instructions Pamela's home office qualifies as her principal place of business for deducting expenses for its use. Irs amended return instructions She conducts administrative or management activities there and she has no other fixed location where she conducts substantial administrative or management activities. Irs amended return instructions 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. Irs amended return instructions 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. Irs amended return instructions Example 3. Irs amended return instructions Paul is a self-employed anesthesiologist. Irs amended return instructions He spends the majority of his time administering anesthesia and postoperative care in three local hospitals. Irs amended return instructions One of the hospitals provides him with a small shared office where he could conduct administrative or management activities. Irs amended return instructions Paul very rarely uses the office the hospital provides. Irs amended return instructions He uses a room in his home that he has converted to an office. Irs amended return instructions He uses this room exclusively and regularly to conduct all the following activities. Irs amended return instructions Contacting patients, surgeons, and hospitals regarding scheduling. Irs amended return instructions Preparing for treatments and presentations. Irs amended return instructions Maintaining billing records and patient logs. Irs amended return instructions Satisfying continuing medical education requirements. Irs amended return instructions Reading medical journals and books. Irs amended return instructions Paul's home office qualifies as his principal place of business for deducting expenses for its use. Irs amended return instructions 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. Irs amended return instructions 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. Irs amended return instructions 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. Irs amended return instructions 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. Irs amended return instructions Example 4. Irs amended return instructions Kathleen is employed as a teacher. Irs amended return instructions She is required to teach and meet with students at the school and to grade papers and tests. Irs amended return instructions 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. Irs amended return instructions The school does not require her to work at home. Irs amended return instructions Kathleen prefers to use the office she has set up in her home and does not use the one provided by the school. Irs amended return instructions She uses this home office exclusively and regularly for the administrative duties of her teaching job. Irs amended return instructions 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. Irs amended return instructions 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. Irs amended return instructions More Than One Trade or Business The same home office can be the principal place of business for two or more separate business activities. Irs amended return instructions 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. Irs amended return instructions You must use the home office exclusively and regularly for one or more of the following purposes. Irs amended return instructions As the principal place of business for one or more of your trades or businesses. Irs amended return instructions 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. Irs amended return instructions If your home office is a separate structure, in connection with one or more of your trades or businesses. Irs amended return instructions You can use your home office for more than one business activity, but you cannot use it for any nonbusiness (i. Irs amended return instructions e. Irs amended return instructions , personal) activities. Irs amended return instructions If you are an employee, any use of the home office in connection with your employment must be for the convenience of your employer. Irs amended return instructions See Rental to employer , later, if you rent part of your home to your employer. Irs amended return instructions Example. Irs amended return instructions Tracy White is employed as a teacher. Irs amended return instructions Her principal place of work is the school, which provides her office space to do her school work. Irs amended return instructions She also has a mail order jewelry business. Irs amended return instructions All her work in the jewelry business is done in her home office and the office is used exclusively for that business. Irs amended return instructions If she meets all the other tests, she can deduct expenses for the business use of her home for the jewelry business. Irs amended return instructions 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. Irs amended return instructions As an employee, Tracy must also meet the convenience-of-the-employer test to qualify for the deduction. Irs amended return instructions 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. Irs amended return instructions 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. Irs amended return instructions You physically meet with patients, clients, or customers on your premises. Irs amended return instructions Their use of your home is substantial and integral to the conduct of your business. Irs amended return instructions Doctors, dentists, attorneys, and other professionals who maintain offices in their homes generally will meet this requirement. Irs amended return instructions Using your home for occasional meetings and telephone calls will not qualify you to deduct expenses for the business use of your home. Irs amended return instructions 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. Irs amended return instructions Example. Irs amended return instructions June Quill, a self-employed attorney, works 3 days a week in her city office. Irs amended return instructions She works 2 days a week in her home office used only for business. Irs amended return instructions She regularly meets clients there. Irs amended return instructions Her home office qualifies for a business deduction because she meets clients there in the normal course of her business. Irs amended return instructions 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. Irs amended return instructions The structure does not have to be your principal place of business or a place where you meet patients, clients, or customers. Irs amended return instructions Example. Irs amended return instructions John Berry operates a floral shop in town. Irs amended return instructions He grows the plants for his shop in a greenhouse behind his home. Irs amended return instructions 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. Irs amended return instructions 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. Irs amended return instructions 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. Irs amended return instructions Electing to use the simplified method. Irs amended return instructions   The simplified method is an alternative to the calculation, allocation, and substantiation of actual expenses. Irs amended return instructions You choose whether or not to figure your deduction using the simplified method each taxable year. Irs amended return instructions See Using the Simplified Method , later. Irs amended return instructions Rental to employer. Irs amended return instructions   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. Irs amended return instructions You can deduct mortgage interest, qualified mortgage insurance premiums, real estate taxes, and personal casualty losses for the rented part, subject to any limitations. Irs amended return instructions 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. Irs amended return instructions 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. Irs amended return instructions You will also need to figure the percentage of your home used for business and the limit on the deduction. Irs amended return instructions 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. Irs amended return instructions 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. Irs amended return instructions Part-year use. Irs amended return instructions   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. Irs amended return instructions 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. Irs amended return instructions Expenses related to tax-exempt income. Irs amended return instructions   Generally, you cannot deduct expenses that are related to tax-exempt allowances. Irs amended return instructions 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. Irs amended return instructions No deduction is allowed for other expenses related to the tax-exempt allowance. Irs amended return instructions   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. Irs amended return instructions Actual Expenses You must divide the expenses of operating your home between personal and business use. Irs amended return instructions The part of a home operating expense you can use to figure your deduction depends on both of the following. Irs amended return instructions Whether the expense is direct, indirect, or unrelated. Irs amended return instructions The percentage of your home used for business. Irs amended return instructions Table 1, next, describes the types of expenses you may have and the extent to which they are deductible. Irs amended return instructions Table 1. Irs amended return instructions Types of Expenses  Expense  Description  Deductibility Direct Expenses only for  the business part  of your home. Irs amended return instructions Deductible in full. Irs amended return instructions *   Examples:  Painting or repairs  only in the area  used for business. Irs amended return instructions Exception: May be only partially  deductible in a daycare facility. Irs amended return instructions See Daycare Facility , later. Irs amended return instructions Indirect Expenses for  keeping up and running your  entire home. Irs amended return instructions Deductible based on the percentage of your home used for business. Irs amended return instructions *   Examples:  Insurance, utilities, and  general repairs. Irs amended return instructions   Unrelated Expenses only for  the parts of your  home not used  for business. Irs amended return instructions Not deductible. Irs amended return instructions   Examples:  Lawn care or painting  a room not used  for business. Irs amended return instructions   *Subject to the deduction limit, discussed later. Irs amended return instructions Form 8829 and the Worksheet To Figure the Deduction for Business Use of Your Home have separate columns for direct and indirect expenses. Irs amended return instructions Certain expenses are deductible whether or not you use your home for business. Irs amended return instructions 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. Irs amended return instructions These expenses include the following. Irs amended return instructions Real estate taxes. Irs amended return instructions Qualified mortgage insurance premiums. Irs amended return instructions Deductible mortgage interest. Irs amended return instructions Casualty losses. Irs amended return instructions Other expenses are deductible only if you use your home for business. Irs amended return instructions You can use the business percentage of these expenses to figure your total business use of the home deduction. Irs amended return instructions These expenses generally include (but are not limited to) the following. Irs amended return instructions Depreciation (covered under Depreciating Your Home , later). Irs amended return instructions Insurance. Irs amended return instructions Rent paid for the use of property you do not own but use in your trade or business. Irs amended return instructions Repairs. Irs amended return instructions Security system. Irs amended return instructions Utilities and services. Irs amended return instructions Real estate taxes. Irs amended return instructions   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. Irs amended return instructions   For more information on the deduction for real estate taxes, see Publication 530, Tax Information for Homeowners. Irs amended return instructions Deductible mortgage interest. Irs amended return instructions   To figure the business part of your deductible mortgage interest, multiply this interest by the percentage of your home used for business. Irs amended return instructions You can include interest on a second mortgage in this computation. Irs amended return instructions 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. Irs amended return instructions For more information on what interest is deductible, see Publication 936, Home Mortgage Interest Deduction. Irs amended return instructions Qualified mortgage insurance premiums. Irs amended return instructions   To figure the business part of your qualified mortgage insurance premiums, multiply the premiums by the percentage of your home used for business. Irs amended return instructions You can include premiums for insurance on a second mortgage in this computation. Irs amended return instructions 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. Irs amended return instructions For more information, see Publication 936, and Line 13 in the Instructions for Schedule A (Form 1040). Irs amended return instructions Casualty losses. Irs amended return instructions    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. Irs amended return instructions A direct expense is the loss on the portion of the property you use only in your business. Irs amended return instructions Use the entire loss to figure the business use of the home deduction. Irs amended return instructions An indirect expense is the loss on property you use for both business and personal purposes. Irs amended return instructions Use only the business portion to figure the deduction. Irs amended return instructions An unrelated expense is the loss on property you do not use in your business. Irs amended return instructions Do not use any of the loss to figure the deduction. Irs amended return instructions Example. Irs amended return instructions You meet the rules to take a deduction for an office in your home that is 10% of the total area of your house. Irs amended return instructions A storm damages your roof. Irs amended return instructions 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. Irs amended return instructions You would complete Form 4684, Casualties and Thefts, to report your loss. Irs amended return instructions 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. Irs amended return instructions 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. Irs amended return instructions 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. Irs amended return instructions Forms and worksheets to use. Irs amended return instructions   If you are filing Schedule C (Form 1040), get Form 8829 and follow the instructions for casualty losses. Irs amended return instructions 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. Irs amended return instructions You will also need to get Form 4684. Irs amended return instructions More information. Irs amended return instructions   For more information on casualty losses, see Publication 547, Casualties, Disasters, and Thefts. Irs amended return instructions Insurance. Irs amended return instructions   You can deduct the cost of insurance that covers the business part of your home. Irs amended return instructions 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. Irs amended return instructions You can deduct the business percentage of the part that applies to the following year in that year. Irs amended return instructions Rent. Irs amended return instructions   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. Irs amended return instructions To figure your deduction, multiply your rent payments by the percentage of your home used for business. Irs amended return instructions   If you own your home, you cannot deduct the fair rental value of your home. Irs amended return instructions However, see Depreciating Your Home , later. Irs amended return instructions Repairs. Irs amended return instructions   The cost of repairs that relate to your business, including labor (other than your own labor), is a deductible expense. Irs amended return instructions For example, a furnace repair benefits the entire home. Irs amended return instructions If you use 10% of your home for business, you can deduct 10% of the cost of the furnace repair. Irs amended return instructions   Repairs keep your home in good working order over its useful life. Irs amended return instructions Examples of common repairs are patching walls and floors, painting, wallpapering, repairing roofs and gutters, and mending leaks. Irs amended return instructions However, repairs are sometimes treated as a permanent improvement and are not deductible. Irs amended return instructions See Permanent improvements , later, under Depreciating Your Home. Irs amended return instructions Security system. Irs amended return instructions   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. Irs amended return instructions 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. Irs amended return instructions Utilities and services. Irs amended return instructions   Expenses for utilities and services, such as electricity, gas, trash removal, and cleaning services, are primarily personal expenses. Irs amended return instructions However, if you use part of your home for business, you can deduct the business part of these expenses. Irs amended return instructions Generally, the business percentage for utilities is the same as the percentage of your home used for business. Irs amended return instructions Telephone. Irs amended return instructions   The basic local telephone service charge, including taxes, for the first telephone line into your home (i. Irs amended return instructions e. Irs amended return instructions , landline) is a nondeductible personal expense. Irs amended return instructions 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. Irs amended return instructions Do not include these expenses as a cost of using your home for business. Irs amended return instructions Deduct these charges separately on the appropriate form or schedule. Irs amended return instructions 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). Irs amended return instructions Depreciating Your Home If you own your home and qualify to deduct expenses for its business use, you can claim a deduction for depreciation. Irs amended return instructions Depreciation is an allowance for the wear and tear on the part of your home used for business. Irs amended return instructions You cannot depreciate the cost or value of the land. Irs amended return instructions You recover its cost when you sell or otherwise dispose of the property. Irs amended return instructions Before you figure your depreciation deduction, you need to know the following information. Irs amended return instructions The month and year you started using your home for business. Irs amended return instructions The adjusted basis and fair market value of your home (excluding land) at the time you began using it for business. Irs amended return instructions The cost of any improvements before and after you began using the property for business. Irs amended return instructions The percentage of your home used for business. Irs amended return instructions See Business Percentage , later. Irs amended return instructions Adjusted basis defined. Irs amended return instructions   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. Irs amended return instructions For a discussion of adjusted basis, see Publication 551. Irs amended return instructions Permanent improvements. Irs amended return instructions   A permanent improvement increases the value of property, adds to its life, or gives it a new or different use. Irs amended return instructions Examples of improvements are replacing electric wiring or plumbing, adding a new roof or addition, paneling, or remodeling. Irs amended return instructions    You must carefully distinguish between repairs and improvements. Irs amended return instructions See Repairs , earlier, under Actual Expenses. Irs amended return instructions You also must keep accurate records of these expenses. Irs amended return instructions These records will help you decide whether an expense is a deductible or a capital (added to the basis) expense. Irs amended return instructions However, if you make repairs as part of an extensive remodeling or restoration of your home, the entire job is an improvement. Irs amended return instructions Example. Irs amended return instructions You buy an older home and fix up two rooms as a beauty salon. Irs amended return instructions 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. Irs amended return instructions Normally, the patching, painting, and floor work are repairs and the other expenses are permanent improvements. Irs amended return instructions 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. Irs amended return instructions You cannot deduct any portion of it as a repair expense. Irs amended return instructions Adjusting for depreciation deducted in earlier years. Irs amended return instructions   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. Irs amended return instructions 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. Irs amended return instructions If you did not deduct any depreciation, decrease the basis by the amount you could have deducted. Irs amended return instructions   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. Irs amended return instructions   If you deducted the incorrect amount of depreciation, see Publication 946. Irs amended return instructions Fair market value defined. Irs amended return instructions   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. Irs amended return instructions 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. Irs amended return instructions Figuring the depreciation deduction for the current year. Irs amended return instructions   If you began using your home for business before 2013, continue to use the same depreciation method you used in past tax years. Irs amended return instructions   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). Irs amended return instructions Under MACRS, nonresidential real property is depreciated using the straight line method over 39 years. Irs amended return instructions For more information on MACRS and other methods of depreciation, see Publication 946. Irs amended return instructions   To figure the depreciation deduction, you must first figure the part of the cost of your home that can be depreciated (depreciable basis). Irs amended return instructions The depreciable basis is figured by multiplying the percentage of your home used for business by the smaller of the following. Irs amended return instructions The adjusted basis of your home (excluding land) on the date you began using your home for business. Irs amended return instructions The fair market value of your home (excluding land) on the date you began using your home for business. Irs amended return instructions Depreciation table. Irs amended return instructions   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. Irs amended return instructions Table 2. Irs amended return instructions MACRS Percentage Table for 39-Year Nonresidential Real Property Month First Used for Business Percentage To Use 1 2. Irs amended return instructions 461% 2 2. Irs amended return instructions 247% 3 2. Irs amended return instructions 033% 4 1. Irs amended return instructions 819% 5 1. Irs amended return instructions 605% 6 1. Irs amended return instructions 391% 7 1. Irs amended return instructions 177% 8 0. Irs amended return instructions 963% 9 0. Irs amended return instructions 749% 10 0. Irs amended return instructions 535% 11 0. Irs amended return instructions 321% 12 0. Irs amended return instructions 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. Irs amended return instructions See Publication 946 for the percentages for the remaining tax years of the recovery period. Irs amended return instructions Example. Irs amended return instructions In May, George Miller began to use one room in his home exclusively and regularly to meet clients. Irs amended return instructions This room is 8% of the square footage of his home. Irs amended return instructions He bought the home in 2003 for $125,000. Irs amended return instructions He determined from his property tax records that his adjusted basis in the house (exclusive of land) is $115,000. Irs amended return instructions In May, the house had a fair market value of $165,000. Irs amended return instructions He multiplies his adjusted basis of $115,000 (which is less than the fair market value) by 8%. Irs amended return instructions The result is $9,200, his depreciable basis for the business part of the house. Irs amended return instructions George files his return based on the calendar year. Irs amended return instructions May is the 5th month of his tax year. Irs amended return instructions He multiplies his depreciable basis of $9,200 by 1. Irs amended return instructions 605% (. Irs amended return instructions 01605), the percentage from the table for the 5th month. Irs amended return instructions His depreciation deduction is $147. Irs amended return instructions 66. Irs amended return instructions Depreciating permanent improvements. Irs amended return instructions   Add the costs of permanent improvements made before you began using your home for business to the basis of your property. Irs amended return instructions Depreciate these costs as part of the cost of your home as explained earlier. Irs amended return instructions 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. Irs amended return instructions 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. Irs amended return instructions For improvements made this year, the recovery period is 39 years. Irs amended return instructions For the percentage to use for the first year, see Table 2, earlier. Irs amended return instructions For more information on recovery periods, see Publication 946. Irs amended return instructions 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. Irs amended return instructions Use the resulting percentage to figure the business part of the expenses for operating your entire home. Irs amended return instructions You can use any reasonable method to determine the business percentage. Irs amended return instructions The following are two commonly used methods for figuring the percentage. Irs amended return instructions Divide the area (length multiplied by the width) used for business by the total area of your home. Irs amended return instructions 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. Irs amended return instructions Example 1. Irs amended return instructions Your office is 240 square feet (12 feet × 20 feet). Irs amended return instructions Your home is 1,200 square feet. Irs amended return instructions Your office is 20% (240 ÷ 1,200) of the total area of your home. Irs amended return instructions Your business percentage is 20%. Irs amended return instructions Example 2. Irs amended return instructions You use one room in your home for business. Irs amended return instructions Your home has 10 rooms, all about equal size. Irs amended return instructions Your office is 10% (1 ÷ 10) of the total area of your home. Irs amended return instructions Your business percentage is 10%. Irs amended return instructions 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. Irs amended return instructions 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. Irs amended return instructions 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. Irs amended return instructions 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. Irs amended return instructions 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)). Irs amended return instructions These expenses are discussed in detail under Actual Expenses , earlier. Irs amended return instructions 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. Irs amended return instructions If you are self-employed, do not include in (2) above your deduction for one-half of your self-employment tax. Irs amended return instructions Carryover of unallowed expenses. Irs amended return instructions   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. Irs amended return instructions They are subject to the deduction limit for that year, whether or not you live in the same home during that year. Irs amended return instructions Figuring the deduction limit and carryover. Irs amended return instructions   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. Irs amended return instructions If you file Schedule C (Form 1040), figure your deduction limit and carryover on Form 8829. Irs amended return instructions Example. Irs amended return instructions You meet the requirements for deducting expenses for the business use of your home. Irs amended return instructions You use 20% of your home for business. Irs amended return instructions 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. Irs amended return instructions    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). Irs amended return instructions You also can deduct all of your business expenses not related to the use of your home ($2,000). Irs amended return instructions 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. Irs amended return instructions Your deduction for depreciation for the business use of your home is limited to $200 ($1,000 minus $800) because of the deduction limit. Irs amended return instructions You can carry over the $1,400 balance and add it to your depreciation for 2014, subject to your deduction limit in 2014. Irs amended return instructions More than one place of business. Irs amended return instructions   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. Irs amended return instructions 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. Irs amended return instructions 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. Irs amended return instructions For more information on transportation costs, see Publication 463, Travel, Entertainment, Gift, and Car Expenses. Irs amended return instructions Using the Simplified Method The simplified method is an alternative to the calculation, allocation, and substantiation of actual expenses. Irs amended return instructions 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. Irs amended return instructions The area you use to figure your deduction is limited to 300 square feet. Irs amended return instructions See Simplified Amount , later, for information about figuring the amount of the deduction. Irs amended return instructions For more information about the simplified method, see Revenue Procedure 2013-13, 2013-06 I. Irs amended return instructions R. Irs amended return instructions B. Irs amended return instructions 478, available at www. Irs amended return instructions irs. Irs amended return instructions gov/irb/2013-06_IRB/ar09. Irs amended return instructions html. Irs amended return instructions Actual expenses and depreciation of your home. Irs amended return instructions   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. Irs amended return instructions 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. Irs amended return instructions The depreciation deduction allowable for that portion of the home is deemed to be zero for a year you use the simplified method. Irs amended return instructions 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. Irs amended return instructions More information. Irs amended return instructions   For more information about claiming depreciation in a subsequent year, see Revenue Procedure 2013-13, 2013-06 I. Irs amended return instructions R. Irs amended return instructions B. Irs amended return instructions 478, available at www. Irs amended return instructions irs. Irs amended return instructions gov/irb/2013-06_IRB/ar09. Irs amended return instructions html. Irs amended return instructions 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). Irs amended return instructions Expenses deductible without regard to business use. Irs amended return instructions   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. Irs amended return instructions These expenses include mortgage interest, real estate taxes, and casualty losses, subject to any limitations. Irs amended return instructions See Where To Deduct , later. Irs amended return instructions 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). Irs amended return instructions No deduction of carryover of actual expenses. Irs amended return instructions   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. Irs amended return instructions Instead, you will continue to carry over the disallowed amount to the next year that you use actual expenses to figure your deduction. Irs amended return instructions Electing the Simplified Method You choose whether or not to figure your deduction using the simplified method each taxable year. Irs amended return instructions 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. Irs amended return instructions An election for a taxable year, once made, is irrevocable. Irs amended return instructions 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. Irs amended return instructions Shared use. Irs amended return instructions   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. Irs amended return instructions More than one qualified business use. Irs amended return instructions   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. Irs amended return instructions More than one home. Irs amended return instructions   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. Irs amended return instructions You must figure the deduction for any other home using actual expenses. Irs amended return instructions 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. Irs amended return instructions 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. Irs amended return instructions The allowable area of your home used in conducting the business. Irs amended return instructions 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. Irs amended return instructions The gross income from the business use of your home. Irs amended return instructions The amount of the business expenses that are not related to the use of your home. Irs amended return instructions 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. Irs amended return instructions To figure the amount you can deduct for qualified business use of your home using the simplified method, follow these 3 steps. Irs amended return instructions 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). Irs amended return instructions See Allowable area and Space used regularly for daycare , later. Irs amended return instructions 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. Irs amended return instructions 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. Irs amended return instructions See Gross income limitation , later. Irs amended return instructions Take the smaller of the amounts from (1) and (2). Irs amended return instructions This is the amount you can deduct for this qualified business use of your home using the simplified method. Irs amended return instructions 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. Irs amended return instructions 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. Irs amended return instructions Allowable area. Irs amended return instructions   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. Irs amended return instructions 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. Irs amended return instructions 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. Irs amended return instructions Area used by a qualified joint venture. Irs amended return instructions   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. Irs amended return instructions Split the actual area used in conducting business between you and your spouse in the same manner you split your other tax attributes. Irs amended return instructions Then, each spouse will figure the allowable area separately. Irs amended return instructions For more information about qualified joint ventures, see Qualified Joint Venture in the Instructions for Schedule C. Irs amended return instructions Shared use. Irs amended return instructions   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. Irs amended return instructions You must allocate the shared space between you and the other person in a reasonable manner. Irs amended return instructions Example. Irs amended return instructions Kristin and Lindsey are roommates. Irs amended return instructions Kristin uses 300 square feet of their home for a qualified business use. Irs amended return instructions Lindsey uses 200 square feet of their home for a separate qualified business use. Irs amended return instructions The qualified business uses share 100 square feet. Irs amended return instructions 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. Irs amended return instructions If divided evenly, Kristin could claim 250 square feet using the simplified method and Lindsey could claim 150 square feet. Irs amended return instructions More than one qualified business use. Irs amended return instructions   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. Irs amended return instructions Allocate the actual square footage used (up to the maximum of 300 square feet) among your qualified business uses in a reasonable manner. Irs amended return instructions However, do not allocate more square feet to a qualified business use than you actually use for that business. Irs amended return instructions Rental use. Irs amended return instructions   The simplified method does not apply to rental use. Irs amended return instructions A rental use that qualifies for the deduction must be figured using actual expenses. Irs amended return instructions 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. Irs amended return instructions 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. Irs amended return instructions Part-year use or area changes. Irs amended return instructions   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. Irs amended return instructions 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. Irs amended return instructions When determining the average monthly allowable square footage, you cannot take more than 300 square feet into account for any one month. Irs amended return instructions Additionally, if your qualified business use was less than 15 days in a month, you must use -0- for that month. Irs amended return instructions Example 1. Irs amended return instructions Andy files his federal income tax return on a calendar year basis. Irs amended return instructions On July 20, he began using 420 square feet of his home for a qualified business use. Irs amended return instructions He continued to use the 420 square feet until the end of the year. Irs amended return instructions 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). Irs amended return instructions Example 2. Irs amended return instructions Amy files her federal income tax return on a calendar year basis. Irs amended return instructions On April 20, she began using 100 square feet of her home for a qualified business use. Irs amended return instructions On August 5, she expanded the area of her qualified use to 330 square feet. Irs amended return instructions Amy continued to use the 330 square feet until the end of the year. Irs amended return instructions 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). Irs amended return instructions Gross income limitation. Irs amended return instructions   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. Irs amended return instructions 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. Irs amended return instructions Business expenses not related to use of the home. Irs amended return instructions   These expenses relate to the business activity in the home, but not to the use of the home itself. Irs amended return instructions You can still deduct business expenses that are unrelated to the use of the home. Irs amended return instructions See Where To Deduct , later. Irs amended return instructions Examples of business expenses that are unrelated to the use of the home are advertising, wages, supplies, dues, and depreciation for equipment. Irs amended return instructions Space used regularly for daycare. Irs amended return instructions   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. Irs amended return instructions The reduced rate will equal the prescribed rate times a fraction. Irs amended return instructions 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. Irs amended return instructions You can use the Daycare Facility Worksheet (for simplified method), near the end of this publication, to help you figure the reduced rate. Irs amended return instructions    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. Irs amended return instructions 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. Irs amended return instructions To qualify for this exception to the exclusive use rule, you must meet both of the following requirements. Irs amended return instructions 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. Irs amended return instructions 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. Irs amended return instructions You do not meet this requirement if your application was rejected or your license or other authorization was revoked. Irs amended return instructions Figuring the deduction. Irs amended return instructions   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. Irs amended return instructions    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. Irs amended return instructions If you also use that part exclusively for daycare, deduct all the allocable expenses, subject to the deduction limit, as explained earlier. Irs amended return instructions   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. Irs amended return instructions 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. Irs amended return instructions You do not have to keep records to show the specific hours the area was used for business. Irs amended return instructions You can use the area occasionally for personal reasons. Irs amended return instructions However, a room you use only occasionally for business does not qualify for the deduction. Irs amended return instructions 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. Irs amended return instructions You can compare the hours of business use in a week with the number of hours in a week (168). Irs amended return instructions Or you can compare the hours of business use for the year with the number of hours in the year (8,760 in 2013). Irs amended return instructions 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. Irs amended return instructions Example 1. Irs amended return instructions Mary Lake used her basement to operate a daycare business for children. Irs amended return instructions She figures the business percentage of the basement as follows. Irs amended return instructions 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. Irs amended return instructions During the other 12 hours a day, the family could use the basement. Irs amended return instructions She figures the percentage of time the basement was used for daycare as follows. Irs amended return instructions 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. Irs amended return instructions 25%           Mary can deduct 34. Irs amended return instructions 25% of any direct expenses for the basement. Irs amended return instructions However, because her indirect expenses are for the entire house, she can deduct only 17. Irs amended return instructions 13% of the indirect expenses. Irs amended return instructions She figures the percentage for her indirect expenses as follows. Irs amended return instructions Business percentage of the basement 50% Multiplied by: Percentage of time used for daycare × 34. Irs amended return instructions 25% Percentage for indirect expenses 17. Irs amended return instructions 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. Irs amended return instructions In Part II, Mary figures her deductible expenses. Irs amended return instructions She uses the following information to complete Part II. Irs amended return instructions 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. Irs amended return instructions (This figure is the same as the amount on line 29 of her Schedule C (Form 1040). Irs amended return instructions ) The expenses she paid for rent and utilities relate to her entire home. Irs amended return instructions Therefore, she enters the amount paid for rent on line 18, column (b), and the amount paid for utilities on line 20, column (b). Irs amended return instructions She shows the total of these expenses on line 22, column (b). Irs amended return instructions For line 23, she multiplies the amount on line 22, column (b) by the percentage on line 7 and enters the result, $1,585. Irs amended return instructions Mary paid $500 to have the basement painted. Irs amended return instructions The painting is a direct expense. Irs amended return instructions 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. Irs amended return instructions 25% – line 6). Irs amended return instructions She enters $171 (34. Irs amended return instructions 25% × $500) on line 19, column (a). Irs amended return instructions She adds line 22, column (a), and line 23 and enters $1,756 ($171 + $1,585) on line 25. Irs amended return instructions This is less than her deduction limit (line 15), so she can deduct the entire amount. Irs amended return instructions She follows the instructions to complete the rest of Part II and enters $1,756 on lines 33 and 35. Irs amended return instructions She then carries the $1,756 to line 30 of her Schedule C (Form 1040). Irs amended return instructions Example 2. Irs amended return instructions 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. Irs amended return instructions 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. Irs amended return instructions 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. Irs amended return instructions The basement and room are 60% of the total area of her home. Irs amended return instructions In figuring her expenses, 34. Irs amended return instructions 25% of any direct expenses for the basement and room are deductible. Irs amended return instructions In addition, 20. Irs amended return instructions 55% (34. Irs amended return instructions 25% × 60%) of her indirect expenses are deductible. Irs amended return instructions Example 3. Irs amended return instructions Assume the same facts as in Example 1 except that Mary stopped using her home for a daycare facility on June 24, 2013. Irs amended return instructions 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. Irs amended return instructions During the other 12 hours a day, the family could still use the basement. Irs amended return instructions She figures the percentage of time the basement was used for business as follows. Irs amended return instructions 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. Irs amended return instructions 71%           Mary can deduct 35. Irs amended return instructions 71% of any direct expenses for the basement. Irs amended return instructions However, because her indirect expenses are for the entire house, she can deduct only 17. Irs amended return instructions 86% of the indirect expenses. Irs amended return instructions She figures the percentage for her indirect expenses as follows. Irs amended return instructions Business percentage of the basement 50% Multiplied by: Percentage of time used for daycare × 35. Irs amended return instructions 71% Percentage for indirect expenses 17. Irs amended return instructions 86% Meals. Irs amended return instructions   If you provide food for your daycare recipients, do not include the expense as a cost of using your home for business. Irs amended return instructions Claim it as a separate deduction on your Schedule C (Form 1040). Irs amended return instructions You can never deduct the cost of food consumed by you or your family. Irs amended return instructions 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. Irs amended return instructions 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. Irs amended return instructions 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. Irs amended return instructions   If you deduct the actual cost of food for your daycare business, keep a separate record (with receipts) of your family's food costs. Irs amended return instructions   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. Irs amended return instructions If your reimbursements are more than your expenses for food, show the difference as income in Part I of Schedule C (Form 1040). Irs amended return instructions If your food expenses are greater than the reimbursements, show the difference as an expense in Part V of Schedule C (Form 1040). Irs amended return instructions Do not include payments or expenses for your own children if they are eligible for the program. Irs amended return instructions Follow this procedure even if you receive a Form 1099-MISC, Miscellaneous Income, reporting a payment from the sponsor. Irs amended return instructions Standard meal and snack rates. Irs amended return instructions   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. Irs amended return instructions For these purposes: A family daycare provider is a person engaged in the business of providing family daycare. Irs amended return instructions Family daycare is childcare provided to eligible children in the home of the family daycare provider. Irs amended return instructions The care must be non-medical, not involve a transfer of legal custody, and generally last less than 24 hours each day. Irs amended return instructions Eligible children are minor children receiving family daycare in the home of the family daycare provider. Irs amended return instructions 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. Irs amended return instructions Eligible children do not include children who receive daycare services for personal reasons of the provider. Irs amended return instructions For example, if a provider provides daycare services for a relative as a favor to that relative, that child is not an eligible child. Irs amended return instructions   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. Irs amended return instructions 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. Irs amended return instructions 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. Irs amended return instructions   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. Irs amended return instructions 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. Irs amended return instructions 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. Irs amended return instructions   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. Irs amended return instructions 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. Irs amended return instructions This information can be recorded in a log similar to the one shown in Exhibit A, near the end of this publication. Irs amended return instructions   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. Irs amended return instructions These expenses can be claimed as a separate deduction on your Schedule C (Form 1040). Irs amended return instructions     Table 3. Irs amended return instructions Standard Meal and Snack Rates1 Location of Family Daycare Provider Breakfast Lunch Dinner Snack States other than Alaska an
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The Irs Amended Return Instructions

Irs amended return instructions Publication 584 - Additional Material Table of Contents This image is too large to be displayed in the current screen. Irs amended return instructions Please click the link to view the image. Irs amended return instructions Entrance Hall This image is too large to be displayed in the current screen. Irs amended return instructions Please click the link to view the image. Irs amended return instructions Living Room This image is too large to be displayed in the current screen. Irs amended return instructions Please click the link to view the image. Irs amended return instructions Dining Room This image is too large to be displayed in the current screen. Irs amended return instructions Please click the link to view the image. Irs amended return instructions Kitchen This image is too large to be displayed in the current screen. Irs amended return instructions Please click the link to view the image. Irs amended return instructions Den This image is too large to be displayed in the current screen. Irs amended return instructions Please click the link to view the image. Irs amended return instructions Bedrooms This image is too large to be displayed in the current screen. Irs amended return instructions Please click the link to view the image. Irs amended return instructions Bathrooms This image is too large to be displayed in the current screen. Irs amended return instructions Please click the link to view the image. Irs amended return instructions Recreation Room This image is too large to be displayed in the current screen. Irs amended return instructions Please click the link to view the image. Irs amended return instructions Laundry and Basement This image is too large to be displayed in the current screen. Irs amended return instructions Please click the link to view the image. Irs amended return instructions Garage This image is too large to be displayed in the current screen. Irs amended return instructions Please click the link to view the image. Irs amended return instructions Sporting Equipment This image is too large to be displayed in the current screen. Irs amended return instructions Please click the link to view the image. Irs amended return instructions Men's Clothing This image is too large to be displayed in the current screen. Irs amended return instructions Please click the link to view the image. Irs amended return instructions Women's Clothing This image is too large to be displayed in the current screen. Irs amended return instructions Please click the link to view the image. Irs amended return instructions Children's Clothing This image is too large to be displayed in the current screen. Irs amended return instructions Please click the link to view the image. Irs amended return instructions Jewelry This image is too large to be displayed in the current screen. Irs amended return instructions Please click the link to view the image. Irs amended return instructions Electrical Appliances This image is too large to be displayed in the current screen. Irs amended return instructions Please click the link to view the image. Irs amended return instructions Linens This image is too large to be displayed in the current screen. Irs amended return instructions Please click the link to view the image. Irs amended return instructions Miscellaneous This image is too large to be displayed in the current screen. Irs amended return instructions Please click the link to view the image. Irs amended return instructions Motor Vehicles Schedule 20. Irs amended return instructions Home (Excluding Contents) Note. Irs amended return instructions If you used the entire property as your home, fill out only column (a). Irs amended return instructions If you used part of the property as your home and part of it for business or to produce rental income, you must allocate the entries on lines 2-9 between the personal part (column (a)) and the business/rental part (column (b)). Irs amended return instructions 1. Irs amended return instructions Description of property (Show location and date acquired. Irs amended return instructions )     (a)  Personal Part (b)  Business/Rental Part 2. Irs amended return instructions Cost or other (adjusted) basis of property (from Worksheet A)     3. Irs amended return instructions Insurance or other reimbursement Note. Irs amended return instructions If line 2 is more than line 3, skip line 4. Irs amended return instructions If line 3 is more than line 2, you exclude gain, and the gain is more than you can exclude, see the instructions for line 3 in the Instructions for Form 4684 for the amount to enter. Irs amended return instructions     4. Irs amended return instructions Gain from casualty. Irs amended return instructions If line 3 is more than line 2, enter the difference here and skip lines 5 through 9. Irs amended return instructions But see Next below line 9. Irs amended return instructions     5. Irs amended return instructions Fair market value before casualty     6. Irs amended return instructions Fair market value after casualty     7. Irs amended return instructions Decrease in fair market value. Irs amended return instructions Subtract line 6 from line 5. Irs amended return instructions     8. Irs amended return instructions Enter the smaller of line 2 or line 7 Note for business/rental part. Irs amended return instructions If the property was totally destroyed by casualty, enter on line 8, column (b) the amount from line 2, column (b). Irs amended return instructions     9. Irs amended return instructions Subtract line 3 from line 8. Irs amended return instructions If zero or less, enter -0-. Irs amended return instructions     Next: Transfer the entries from line 1 and lines 2-9, column (a), above to the corresponding lines on Form 4684, Section A. Irs amended return instructions Transfer the entries from line 1 and lines 2-9, column (b), to the corresponding lines on Form 4684, Section B. Irs amended return instructions Worksheet A. Irs amended return instructions Cost or Other (Adjusted) Basis Caution. Irs amended return instructions See the Worksheet A Instructions before you use this worksheet. Irs amended return instructions         (a) Personal Part (b) Business/Rental Part 1. Irs amended return instructions   Enter the purchase price of the home damaged or destroyed. Irs amended return instructions (If you filed Form 2119 when you originally acquired that home to postpone gain on the sale of a previous home before May 7, 1997, enter the adjusted basis of the new home from that Form 2119. Irs amended return instructions ) 1. Irs amended return instructions     2. Irs amended return instructions   Seller paid points for home bought after 1990. Irs amended return instructions Do not include any seller-paid points you already subtracted to arrive at the amount entered on line 1 2. Irs amended return instructions     3. Irs amended return instructions   Subtract line 2 from line 1 3. Irs amended return instructions     4. Irs amended return instructions   Settlement fees or closing costs. Irs amended return instructions (See Settlement costs in Publication 551. Irs amended return instructions ) If line 1 includes the adjusted basis of the new home from Form 2119, skip lines 4a-4g and 5; go to line 6. Irs amended return instructions         a. Irs amended return instructions Abstract and recording fees 4a. Irs amended return instructions       b. Irs amended return instructions Legal fees (including fees for title search and preparing documents) 4b. Irs amended return instructions       c. Irs amended return instructions Survey fees 4c. Irs amended return instructions       d. Irs amended return instructions Title insurance 4d. Irs amended return instructions       e. Irs amended return instructions Transfer or stamp taxes 4e. Irs amended return instructions       f. Irs amended return instructions Amounts that the seller owed that you agreed to pay (back taxes or interest, recording or mortgage fees, and sales commissions) 4f. Irs amended return instructions       g. Irs amended return instructions Other 4g. Irs amended return instructions     5. Irs amended return instructions   Add lines 4a through 4g 5. Irs amended return instructions     6. Irs amended return instructions   Cost of additions and improvements. Irs amended return instructions (See Increases to Basis in Publication 551. Irs amended return instructions ) Do not include any additions and improvements included on line 1 6. Irs amended return instructions     7. Irs amended return instructions   Special tax assessments paid for local improvements, such as streets and sidewalks 7. Irs amended return instructions     8. Irs amended return instructions   Other increases to basis 8. Irs amended return instructions     9. Irs amended return instructions   Add lines 3, 5, 6, 7, and 8 9. Irs amended return instructions     10. Irs amended return instructions   Depreciation allowed or allowable, related to the business use or rental of the home 10. Irs amended return instructions 0   11. Irs amended return instructions   Other decreases to basis (See Decreases to Basis in Publication 551. Irs amended return instructions ) 11. Irs amended return instructions     12. Irs amended return instructions   Add lines 10 and 11 12. Irs amended return instructions     13. Irs amended return instructions   Cost or other (adjusted) basis of home damaged or destroyed. Irs amended return instructions Subtract line 12 from line 9. Irs amended return instructions Enter here and on Schedule 20, line 2 13. Irs amended return instructions     Worksheet A Instructions. Irs amended return instructions If you use Worksheet A to figure the cost or other (adjusted) basis of your home, follow these instructions. Irs amended return instructions DO NOT use this worksheet to determine your basis if you acquired an interest in your home from a decedent who died in 2010 and whose executor filed Form 8939. Irs amended return instructions IF. Irs amended return instructions . Irs amended return instructions . Irs amended return instructions   THEN. Irs amended return instructions . Irs amended return instructions . Irs amended return instructions you inherited your home from a decedent who died either before or after 2010 or from a decedent who died in 2010 and whose executor did not file Form 8939. Irs amended return instructions 1 skip lines 1–4 of the worksheet. Irs amended return instructions 2 find your basis using the rules under Inherited Property in Publication 551. Irs amended return instructions Enter this amount on line 5 of the worksheet. Irs amended return instructions 3 fill out lines 6–13 of the worksheet. Irs amended return instructions you received your home as a gift 1 read Property Received as a Gift in Publication 551 and enter on lines 1 and 3 of the worksheet either the donor's adjusted basis or the home's fair market value at the time of the gift, whichever is appropriate. Irs amended return instructions 2 if you can add any federal gift tax to your basis, enter that amount on line 5 of the worksheet. Irs amended return instructions 3 fill out the rest of the worksheet. Irs amended return instructions you received your home as a trade for other property 1 enter on line 1 of the worksheet the fair market value of the other property at the time of the trade. Irs amended return instructions (But if you received your home as a trade for your previous home before May 7, 1997, and had a gain on the trade that you postponed using Form 2119, enter on line 1 of the worksheet the adjusted basis of the new home from that Form 2119. Irs amended return instructions ) 2 fill out the rest of the worksheet. Irs amended return instructions you built your home 1 add the purchase price of the land and the cost of building the home. Irs amended return instructions Enter that total on line 1 of the worksheet. Irs amended return instructions (However, if you filed a Form 2119 to postpone gain on the sale of a previous home before May 7, 1997, enter on line 1 of the worksheet the adjusted basis of the new home from that Form 2119. Irs amended return instructions ) 2 fill out the rest of the worksheet. Irs amended return instructions you received your home from your spouse after July 18, 1984 1 skip lines 1–4 of the worksheet. Irs amended return instructions 2 enter on line 5 of the worksheet your spouse's cost or other (adjusted) basis in the home just before you received it. Irs amended return instructions 3 fill out lines 6–13 of the worksheet, making adjustments to basis only for events after the transfer. Irs amended return instructions you owned a home jointly with your spouse, who transferred his or her interest in the home to you after July 18, 1984     fill out one worksheet, making adjustments to basis for events both before and after the transfer. Irs amended return instructions   you received your home from your spouse before July 19, 1984 1 skip lines 1–4 of the worksheet. Irs amended return instructions 2 enter on line 5 of the worksheet the home's fair market value at the time you received it. Irs amended return instructions 3 fill out lines 6–13 of the worksheet, making adjustments to basis only for events after the transfer. Irs amended return instructions you owned a home jointly with your spouse, and your spouse transferred his or her interest in the home to you before July 19, 1984 1 fill out a worksheet, lines 1–13, making adjustments to basis only for events before the transfer. Irs amended return instructions 2 multiply the amount on line 13 of that worksheet by 50% (0. Irs amended return instructions 50) to get the adjusted basis of your half-interest at the time of the transfer. Irs amended return instructions 3 multiply the fair market value of the home at the time of the transfer by 50% (0. Irs amended return instructions 50). Irs amended return instructions Generally, this is the basis of the half-interest that your spouse owned. Irs amended return instructions 4 add the amounts from steps 2 and 3 and enter the total on line 5 of a second worksheet. Irs amended return instructions 5 complete lines 6–13 of the second worksheet, making adjustments to basis only for events after the transfer. Irs amended return instructions you owned your home jointly with a nonspouse 1 fill out lines 1–13 of the worksheet. Irs amended return instructions 2 multiply the amount on line 13 by your percentage of ownership to get the adjusted basis of your part-interest. Irs amended return instructions Worksheet A Instructions. Irs amended return instructions (Continued) IF. Irs amended return instructions . Irs amended return instructions . Irs amended return instructions   THEN. Irs amended return instructions . Irs amended return instructions . Irs amended return instructions you owned your home jointly with your spouse who died before 2010 and before the casualty 1 fill out a worksheet, lines 1–13, including adjustments to basis only for events before your spouse's death. Irs amended return instructions 2 multiply the amount on line 13 of that worksheet by 50% (0. Irs amended return instructions 50) to get the adjusted basis of your half-interest on the date of death. Irs amended return instructions 3 figure the basis for the half-interest owned by your spouse. Irs amended return instructions This is one-half of the fair market value on the date of death (or later alternate valuation used for estate or inheritance tax). Irs amended return instructions (The basis in your half will remain one-half of the adjusted basis determined in step 2. Irs amended return instructions ) 4 add the amounts from steps 2 and 3 and enter the total on line 5 of a second worksheet. Irs amended return instructions 5 complete lines 6–13 of the second worksheet, making adjustments to basis only for events after your spouse's death. Irs amended return instructions you owned your home jointly with your spouse who died before 2010 and before the casualty, and your permanent legal home is in a community property state 1 skip lines 1–4 of the worksheet. Irs amended return instructions 2 enter the amount of your basis on line 5 of the worksheet. Irs amended return instructions Generally, this is the fair market value of the home at the time of death. Irs amended return instructions (But see Community Property in Publication 551 for special rules. Irs amended return instructions ) 3 fill out lines 6–13 of the worksheet, making adjustments to basis only for events after your spouse's death. Irs amended return instructions you owned your home jointly with a nonspouse who died before 2010 and before the casualty 1 fill out lines 1–13 of the worksheet, including adjustments to basis only for events before the co-owner's death. Irs amended return instructions 2 multiply the amount on line 13 by your percentage of ownership to get the adjusted basis of your part-interest on the date of death. Irs amended return instructions 3 multiply the fair market value on the date of death (or later alternate valuation used for estate or inheritance tax) by the co-owner's percentage of ownership. Irs amended return instructions This is the basis for the co-owner's part-interest. Irs amended return instructions 4 add the amounts from steps 2 and 3 and enter the total on line 5 of a second worksheet. Irs amended return instructions 5 complete lines 6–13 of the second worksheet, including adjustments to basis only for events after the co-owner's death. Irs amended return instructions your home was ever damaged as a result of a prior casualty 1 on line 8 of the worksheet, enter any amounts you spent to restore the home to its condition before the prior casualty. Irs amended return instructions 2 on line 11 enter: any insurance reimbursements you received (or expect to receive) for the prior loss,  and any deductible casualty losses from prior years not covered by insurance. Irs amended return instructions the person who sold you your home paid points on your loan and you bought your home after 1990 but before April 4, 1994. Irs amended return instructions   on line 2 enter the seller-paid points only if you deducted them as home mortgage interest in the year paid (unless you used the seller-paid points to reduce the amount on line 1). Irs amended return instructions the person who sold you your home paid points on your loan and you bought your home after April 3, 1994   on line 2 enter the seller-paid points even if you did not deduct them (unless you used the seller-paid points to reduce the amount on line 1). Irs amended return instructions you used part of the property as your home and part of it for business or to produce rental income   you must allocate the entries on Worksheet A between the personal part (column (a)) and the business/rental part (column (b)). Irs amended return instructions none of these items apply   fill out the entire worksheet. Irs amended return instructions Prev  Up  Next   Home   More Online Publications