Has anyone else encountered an issue with Form 8829 where the Gross income limitation is negative when it should be positive?

Forum|Forum|1 year ago
January 31, 2025
3 replies
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In the simplified Method Smart Worksheet box, line A is gross income limitation. Based on last year, this should come from Schedule C line 29. Line A is populated by the program and cannot be modified as far as I can tell. In my case it shows the negation of line 28, so I therefore cannot qualify for the deduction. Intuit needs to fix this but I don't know how to contact them directly.

AnnetteB6

To take a closer look at the situation and try to provide a solution for you, it would be very helpful to have a diagnostic copy of your tax file. The diagnostic file will not contain personally identifiable information, only numbers related to your tax forms.

If you would like to provide us with the diagnostic file, follow the instructions below and post the token number along with which version of TurboTax you are using and what states you are filing in a follow-up thread.

Use these steps if you are using TurboTax Online:

Sign in to your account and be sure you are in your tax return.
Select Tax Tools in the menu to the left.
Select Tools.
Select Share my file with agent.
A pop-up message will appear, select OK to send the sanitized diagnostic copy to us.
Post the token number here.

If you are using a CD/downloaded version of TurboTax, use these steps:

Select Online at the top of the screen.
Select Send Tax File to Agent.
Click OK.
Post the token number here.

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massif00

I also have the same issue as you encountered. It shows a negative number as profit from my home business when clearly I have a profit this year and should be allowed to use my home office space as a deduction just like last year and all the years before that. It also shows in the summary for this 1099-NEC earnings of $0 instead of the over $9000 that it calculated on the form. Something is really wrong on using the Turbo Tax form 8829 in multiple places. Has there been a fix to these calculations and data entries yet?

AnnetteB6

There was an examination of multiple customer token files to determine whether further investigation by the development team was required. The conclusion is that TurboTax is calculating the Simplified Home Office deduction correctly in each situation that was examined.

Here are the details about how the Simplified Home Office deduction works, and what could be causing the situation in your return.

For any home office deduction (actual expenses or simplified), the home office deduction is not allowed to take a Schedule C bottom line from a positive profit to a loss. Therefore, before the home office deduction is calculated, the tentative profit or loss of the business is considered. If the number is a loss, then no simplified home office deduction is allowed. However, even with a loss, an actual expense home office deduction can be calculated and carried over to the next year. Carryover is only possible when using the actual expenses, not the simplified method.

The profit/loss number that is used to decide whether the home office expense is allowed comes from Schedule C line 7 minus Schedule C line 28. If the result is positive, then that is the first step to get the simplified home office deduction.

However, the Business Conducted in the Home Office comes into play too. If that number is not entered, then it is assumed to be zero. Zero times the income on Schedule C line 7 minus Schedule C line 28 gives a negative number, which means no home office deduction in the current year (carryover if using actual expense method).

If the Business Conducted in the Home Office percentage is any number less than 100%, then the amount on Schedule C line 7 is adjusted by that percentage before the expenses are subtracted. So even with what you expect to be a positive profit situation, the percentage of business conducted in the home office can drop the income to a level where the profit is negative instead of positive. This means that the simplified home office method is not allowed. Again, using the actual expense method can work, but the home office expense is carried over to a future year.

@gmcconvi

@massif00

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massif00

Thank you for your detailed response, I have examined in my return the lines that you stated in your response.

On Schedule C, Line 7=11225 and line 28= 2702 and line 29 is the difference = 8523. The business code is correct as last year and all previous years and the percentage of home use for this business is 100%. So the simple method should be allowed, What is interesting is on the worksheet to calculate the Simplified Method Smart Worksheet Line A says -2702 which is the loss of the business line 28 instead of taking line 29 of 8523. This is the problem as we cannot change the programming of Turbo Tax as we have no control of it getting that number.

Please investigate where it is getting the number it places in the Simplified Method Smart Worksheet Line A and you will see the mistake that needs correcting. I was in IT and have a Ph.D and I know what I am talking about.

Many Thanks!

AnnetteB6

If you are using a desktop version of TurboTax, then you have access to Forms mode and you can see for yourself where the number comes from. Highlight the number in question, right-click on it, and choose Data Source. A window will open to tell you where that number originated. It may show a source (such as a worksheet) that you do not see down the left side of the page, but you can search for it by clicking Open Form in the upper left corner, typing the form name, and opening it to dig further.

But to save you some steps, the Simplified Method Smart Worksheet line A (Gross Income Limitation) comes from Form 8829 Worksheet, Part II, line 9. This is the worksheet that you may need to search in order to view it.

When you look at the Form 8829 Worksheet, Part II, line 9, you will see that it is a calculated value, not a direct transfer from another point in your tax return. Often the Part II, line 2, percent of gross income from business use of the home reported on Schedule C is the source of any issues with negative results which disallow the simplified method of claiming home office expenses. If the percent of gross income from business use of the home is zero, then line 9 will possibly be the same value as the loss of the business, line 28 from Schedule C.

This Part II line 2 value is entered on a page with the title Business conducted in home office. This screen is part of the Home Office Expense section of your Schedule C.

I will happily review a diagnostic copy of your return to further explain what is happening in your particular situation. The instructions for providing the token number are in a thread above.

@massif00

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