Example 3.

Carter files a federal income tax return on a calendar year basis. From January 1 through July 16, Carter used 300 square feet of the home for a qualified business use. On July 17, Carter moved to a new home and immediately began using 200 square feet of the new home for the same qualified business use. Using the simplified method to deduct expenses for the qualified business use for the previous home, Carter’s average monthly allowable square footage is 175 square feet (300 square feet for January through July divided by the number of months in the year ((300 + 300 + 300 + 300 + 300 + 300 + 300)/12)). Carter also prepared Form 8829 to deduct the actual expenses associated with the qualified business use of the new home.

Once you have determined your allowable square footage, enter the result on line 2 of the Simplified Method Worksheet.

If you moved during the year, your average allowable square footage will generally be less than 300.

You can use the Area Adjustment Worksheet in Pub. 587 to help you determine the allowable square footage to enter on line 2 of the Simplified Method Worksheet.

Reporting your expenses for business use of the home.

If you didn’t use the simplified method, include the amount from line 36 of Form 8829 on line 30 of the Schedule C you are filing for that business.