Husband and Wife both work from home...

wrote

As long as the space or spaces used for your and her business aren't used for personal or non-business purposes, then the home office deduction is allowed. You can't each take deductions for the same expense, but the total "home office" allocation can be split between the two of you. In other words, no double dipping.

If both of you use 20% of the house for business purposes, then you can split that 20% between both your Schedule C businesses. I'd suggest by the space you each use. So if you use 200sf and she uses 100sf, you'd get 2/3 of the home office expense and she'd get 1/3 of those costs.

You each file separate home office forms that tie back to each separate Schedule C business.

The basic rule is that you can't deduct the same thing twice.

You say you file "a schedule C." Does that mean you are in the same business? If so, your home office expenses are probably the same with and without your wife, though if there are two desks now you might be able to get a slighly higher deduction for rent or depreciation.

If you are in different businesses you need separate schedule C's. In that case you can each take your share of the deductions, say one half each. But again, you can't deduct the same things twice.

Stu

Your mortgage interest and your property taxes are Schedule A deductions. The principal on your mortgage is NOT subject to deduction anywhere. The hazard insurance on your house may be allocated by square footage. And again, as others have stated, that square footage needs to be defined as business space only.

If you are both well above the $600 minimum for self-employment taxes, I do not see the allocation of Schedule C expenses as affecting your taxes due. My suggestion is to allocate by net income after sales, but keep separate any 179 items.

Dick

Sorry.

I forgot to add that you have to take depreciation on your house for the "business space only" percentage usage. "Have to" means if you don't the IRS may well take it for you when they compute depreciation recapture upon sale of your house.

Dick

The minimum income where you have to file a Schedule SE is $400. Actually, from Schedule SE it looks like if x*.9235

If this is a schedule C business, then on the office in the home (OIH)

indirect exxpenses, you would claim a prr rata share of home mortgage interest as wekll as property taxes. The rest flow back to Schedule A.

That way you get more Sch C expenses and lower SE tax.

Thank you, Art. Lowering SE taxes is an honorable endeavor.

Dick

What if they have different businesses, and use the same space? Do the rules say that the deduction for business B1 is only possible if the space is used exclusively for business B1?

Actually, assuming you meet all of the "home office" criteria, you can apply the business use percentage of the home to the deductions that would otherwise be Sch A deductions (i.e., mortgage interest and taxes). Apply the business use percentage to the 1098 interest expense and take that to Sch C (or allocate between the Sch C's as appropriate) and take the remainder to Sch A. Same for property taxes. The advantage of this is that it lowers income subject to self-employment taxes as well as reduces AGI for other purposes such as 7.5% & 2% medical & misc itemized deduction haircuts.

Correct, unless they've changed it in the past few years.

Steve

No. The rules require that the space be used exclusively for business purposes. If they have two (or more) businesses allocate the expenses on a reasonable basis (gross income perhaps) between the two or more businesses. The point is that if you have $5,000 of home office expenses and three Sch C's, you can't take the same $5,000 of expenses on each of the three Sch C's but rather you must allocate the total of $5,000 among them.

Note: exclusively does not mean primarily.