Form 8829 is the IRS form self-employed people use to work out the home office deduction on Schedule C using the regular method: the business share of real costs like rent, mortgage interest, utilities and depreciation. The alternative is the simplified method at $5 per square foot, up to 300 square feet, which skips Form 8829 entirely.
So the first decision isn't how to fill in the form, it's which method gives you more. The detail that often tips the choice is carryover: the regular method lets you carry unused expenses into next year, which the simplified method doesn't.
Who can use Form 8829
You can generally deduct expenses for part of your home only if you use that part exclusively and regularly in one of these ways:
- As your principal place of business.
- As a place where you meet or deal with patients, clients or customers in the normal course of business.
- As a separate structure, not attached to your home, used for your business.
Two exceptions don't need exclusive use: space used regularly to store inventory or product samples, if your home is the only fixed location of a retail or wholesale business, and certain daycare facilities.
Your home office can be your principal place of business even if you see clients elsewhere, as long as you use it exclusively and regularly for admin or management work, like billing, bookkeeping, ordering supplies or setting appointments, and you have no other fixed location where you do substantial admin.
Who can't use it
- Employees. The instructions say you can't deduct home office expenses as an employee on your personal return.
- Partners claiming actual expenses, and farmers filing Schedule F. They use the worksheet in Publication 587 instead.
- Anyone using the simplified method for that home for the year.
Regular method vs simplified method
| Regular method (Form 8829) | Simplified method | |
|---|---|---|
| How it's worked out | Business share of actual home expenses | $5 per square foot of business space |
| Cap | Limited by the gross income from the business use of your home | Maximum 300 square feet |
| Depreciation | Yes, on the business part of the home | Treated as zero |
| Unused expenses | Can carry over to next year | No carryover |
| Paperwork | Form 8829 attached to Schedule C | No Form 8829 |
Topic 509 makes the point that whichever method you use, you can't deduct business expenses beyond the gross income limit, but under the regular method you may be able to carry forward some of them. That's why a business with a loss year, or a small first year, can be better off on Form 8829 even when the simplified figure looks similar. For the other route, see the simplified home office deduction.
How Form 8829 works, step by step
- Part I: measure the business area and the whole home. Square feet is fine, or any reasonable method. Divide one by the other to get your business percentage on line 7.
- Line 8: enter your income. If all of it comes from the home business, that's the figure from Schedule C, line 29.
- Part II: list expenses. Direct expenses, like painting or repairs in the office itself, go in column (a) at 100%. Indirect expenses, for running the whole home, go in column (b) and get the business percentage.
- Part III: work out depreciation on the business part of the home. You enter the home's basis, minus the land, and the percentage depends on the month you first used it for business.
- Part IV: carry forward any excess operating expenses and depreciation you couldn't deduct this year.
- Transfer the allowed total to Schedule C.
When an indirect cost doesn't match your business percentage, you only enter the business part. The IRS example: an $800 electric bill where $300 is lighting, in a home that's 10% business, means $30 on line 21 in column (a), and nothing in column (b).
Depreciation looks fiddly, but it's worth doing. For a home first used for business in January 2025, the instructions set the line 41 rate at 2.461%, and the rate is lower for each later starting month, down to 0.963% for August. You apply that to the business share of the home's value, excluding land.
Two 2025 changes worth knowing
- As of October 2026, the 2025 instructions say the overall limit on the deduction for state and local taxes rose to $40,000 ($20,000 married filing separately), reduced above $500,000 of modified adjusted gross income but not below $10,000. That affects how real estate taxes split between Form 8829 and Schedule A.
- If you take the standard deduction, the instructions say you don't put mortgage interest or real estate taxes on lines 10 and 11. You claim the whole business share on lines 16 and 17 instead.
If you're working out what else to claim, Schedule C is where this deduction lands, alongside your other business expenses.
The verdict
If your office is small and your costs are low, the simplified $5 per square foot method is quicker and perfectly sensible. But if you rent or own a larger space, have real utility and repair costs, or expect a low-income year, do the Form 8829 sums before you choose. Depreciation and carryover are the two things the simplified method throws away, and for a growing business they can be worth more than the time the form takes. Whichever you pick, the exclusive use test is non-negotiable: a desk in the family dining room doesn't qualify.
Want AI doing the heavy lifting in your marketing?
I build the systems that handle the boring 80 percent, so you get your week back. Done properly, with the human kept in.
Rental properties are reported elsewhere, and our guide to reporting rental property explains how.
Frequently asked questions
What is Form 8829 used for?
It's used to figure the allowable expenses for business use of your home on Schedule C, and any carryover of expenses you couldn't deduct this year.
Do I need Form 8829 for the simplified method?
No. If you use the simplified method of $5 per square foot, up to 300 square feet, you don't file Form 8829 for that home.
Can employees use Form 8829?
No. The instructions say you can't deduct home office expenses as an employee on your personal return.
What's the difference between direct and indirect expenses?
Direct expenses benefit only the business area, like repairs to the office, and count at 100%. Indirect expenses run the whole home and are multiplied by your business percentage.
Can I carry over home office expenses?
Under the regular method, yes. Expenses above the gross income limit can carry forward on Form 8829. The simplified method has no carryover.
Does my home office have to be used only for business?
Generally yes, exclusively and regularly. The exceptions are inventory or sample storage when your home is the only fixed location, and certain daycare facilities.
