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50 | P a g e October 25 house/garage/personal equipment; insurance policy breakdowns of cost of premiums for farm and personal home costs. If utilities are measured and billed separately, the household is entitled to the separately billed utility costs as a self-employment cost of doing business. IN-HOME BUSINESS EXPENSE When the self-employment business is conducted in the household’s home, and the household wants to claim a portion of its shelter expenses as a business deduction, you must separate business expenses from personal shelter expenses. The portion of the home used on an exclusive basis for a business is allowed as a business expense. A substantial amount of time must be spent doing business in the home (not occasionally) to use home shelter costs as a business expense. If the in-home business is NOT related to dependent care, the business must also meet one of the following two conditions. • An allowance for space regularly used for inventory storage may be allowed if the space is identifiable and only used for self-employment; OR, • The portion of the home must be used on an exclusive basis. The space allocated to the business must be used only for the business. You determine the usage of home with the agreement of the household for business purposes by: • The household's calculation of use • IRS Form 8829 percentage (only if the business and personal home costs are separated on this form) • The ratio of business square footage to square footage of the entire home; OR, • The business share of home expenses is allowed as a deduction from the self- employment income. Business Use of Home – Figuring the Percentage To find the business percentage, compare the size of the part of your home that you use for business to your whole house. Use the resulting percentage to figure the business part of the expenses for operating your entire home. You can use any reasonable method to determine the business percentage. The following are two commonly used methods for figuring the percentage. 1. Divide the area (length multiplied by the width) used for business by the total area of your home.