TurboTax does not allow home office deduction ...

Forum|Forum|1 year ago
February 4, 2025
4 replies
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In 2024, I worked as an independent consultant for 3 months, for which I received a 1099-NEC, worked from my home office 100% and have only $300 of business expense. I plan to use standard home office deduction. However, TurboTax does not allow me to get home office deduction because 'the net profit of your business was zero or less'. This doesn't seem to make sense. How do I fix it? Thank you.

AnnetteB6

When this happens, it is usually due to a combination of your income attributable to the home office and your other business expenses wiping out any profit that could be reduced by the home office expense.

Go back through the early questions of the home office section and double check your answers. Remember that if you perform all of your work in the home office, then you would put 100% of your time was spent there for the 3 months that you used the home office.

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BachateraAuthor

I triple checked all entries - they are correct.

The problem is, when it comes to home office deduction, TurboTax pulls line 28 (expenses) and not line 29 (profit) 0n Schedule C, for Form 8829 Gross Income Limitation. This makes the programs 'thinks' there is a net loss. How do we correct this? Alternatively, can we manually override From 8829 - Gross Income Limitation?

Thank you!

PatriciaV

Employee

The amount on Form 8829 Line 8 should be the same as Schedule C Line 29. If there is a loss on Line 29 or if your Home Office Expenses (Form 8829 Line 27) are more than the amount on Line 28, you may not have a reportable deduction for the current year.

Unused Home Office Deductions are carried forward to future years to be applied when your business has sufficient profit.

If you are certain the correct numbers are not shown on Form 8829, please post screenshots of both Schedule C Line 29 and Form 8829 Lines 15 - 36.

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dtaylor5

I am having the same issue.

If I opt for the actual expense calculation method I can get through it and get a deduction.

(Which by the way is really confusing when it comes to mortgage and taxes. I found I had to go ahead and enter in 1098 for mortgage before going through this or it had problems. And the wording is so confusing when it comes to what needs entering in the excess interest or real estate tax deductions.)

But if I select simple home office calculation, I get the message: The net profit for your work was zero or less, which means you can't claim any home office deductions.

This part need work for sure.

A Havey

I too am having this problem and look forward to a fix from an update! I am ready to file my taxes except for this issue!

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. There is no further fix or update required.

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.

If you feel that none of these situations apply to your return, you can provide a diagnostic copy of your tax return so that it may be examined in greater detail. See 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.

@A Havey

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Grubster

I'm having the same issue.

1. On Simplified Method Smart Worksheet on Form 8829, Line A. is showing the Expense as a negative number pulled from Line 28 on Schedule C!

2. What it should be pulling is line 29, the Profit or Loss which is Line 7 minus Line 28. I have a Positive Profit, yes the simplified worksheet is pulling in a negative number.

3. I even reviewed with my Accountant and he told me about this. There is also no way to OverRide this in Turbo Tax that I can find.

Of note, my housing is 100%, so it would not be multiplying by 0 thus reducing my deduction.

Tub70624

I ran into the same issue and spent 2 days trying to figure out why it won't let me e-file. I filed for standard deductions for Home Office. For some reason at the time when adding that deduction in, Turbotax created a new line showing the standard deduction, AND also created an empty line with no information. So when you look at it, it may seem like you only have one Office Deduction, but there's actually (2) and you can tell because of the garbage can icon where you can select to delete the empty input. the empty line makes Turbo Tax thinks you have two offices and there's some stipulation about needing two forms, etc. etc. which is what triggered the error.

Once I deleted the empty line that was created by default under Office Deductions, it worked and I was able to e-file.

Hope this helps those in the same boat.