Preview the IRS form
Form 8829 calculates allowable actual expenses for Schedule C and any carryover. Open the 2025 IRS PDF.
Choose your situation
Schedule C actual expenses
Use Form 8829 for each qualifying home. Deduct direct and indirect expenses under the rules for the year you are filing.
Schedule C simplified method
Use the Schedule C worksheet. The usual rate is $5 per eligible square foot, up to 300 square feet. The income limit, part-year use and shared daycare space can reduce the amount. You can choose this method for only one home in a year.
Daycare in shared space
Check whether your daycare meets the licensing, application or exemption requirement. For actual expenses, combine the space and time percentages for a shared room. When use starts or ends during the year, use the hours the home was available during that period.
Inventory and product sample storage
A retail or wholesale business may qualify for regular storage in a separately identifiable space if the home is its only fixed location. If every home expense belongs in inventory costs, use Schedule C Part III.
Partners and farmers
Publication 587 has the worksheets for Schedule F farm use and qualifying unreimbursed expenses a partner must pay under the partnership agreement.
Employee use
For ordinary employee wages, Form 8829 does not provide a federal deduction. If the statutory employee box on your W-2 is checked, use the Schedule C instructions for that income and its related expenses. If you also run a separate business, evaluate each activity and the space it uses.
Compare methods or account for a move
Publication 587 explains the income limits, carryovers, and allocation rules. When you move, determine eligibility and dates separately for each home.
Measurements, expenses and depreciation
For ordinary office use, check regular and exclusive use and the applicable business-use test before measuring the space. In Part III of the actual-expense form, line 37 uses the lower of cost or other basis and fair market value when business use began, including land. Account for land separately on line 38. For a later sale, retain the history of depreciation allowed or allowable, including years before a switch to the simplified method.
For 2025, the IRS corrected its worksheet instructions for lines 11 and 17. Read the IRS correction.
When your home and business cross state lines
Check the resident, part-year or nonresident returns that apply. A home address alone does not establish which state permits an expense. For example, California has its own treatment of unreimbursed employee expenses. California part-year and nonresident instructions.
Pennsylvania requires actual home-office costs for its individual income tax even if you use the federal simplified method. A self-employed filer reports allowable expenses on PA Schedule C. Employees who meet Pennsylvania’s conditions use Schedule UE. Pennsylvania Schedule C instructions.
New Hampshire. A proprietor's federal business profit is a starting point for the state Business Profits Tax. Test the filing threshold using gross income before subtracting home expenses. For 2023 through 2025, New Hampshire excludes federal bonus depreciation. Track qualifying equipment separately from the business portion of the home and check the state basis when you sell. A multistate business may have to apportion profit using sales. A home address alone does not determine its share. The Business Enterprise Tax has its own filing test. New Hampshire depreciation adjustments · Business Profits Tax rules
Illinois. Start an individual return with federal adjusted gross income and apply Illinois modifications. A self-employed person’s qualifying home expenses enter through the net business income already included there. Check Illinois special depreciation for qualifying equipment. For a nonresident operating a business or farm in multiple states, use the business or farm apportionment worksheet in the return-year Schedule NR instructions. Reciprocity for employee wages does not allocate business profit. An employee seeking reimbursement of a required expense has a separate process under Illinois wage law. Illinois income tax · Schedule NR
District of Columbia. Check the unincorporated business franchise return separately from an individual return. The $12,000 gross-income test uses income before home-office expenses. The personal-services exclusion requires more than 80 percent of gross income to come from qualifying services by the individuals or members, and capital must not be a material income-producing factor. Check other exclusions, District apportionment and depreciation adjustments in the instructions for the year. District business forms · Statutory exclusions
Other states tax a different measure. Washington’s business and occupation tax generally uses gross receipts, so it does not allow a deduction for ordinary rent and utilities. Serving a customer in another state can also create a separate filing obligation there. Washington business and occupation tax.
New York’s 2025 itemized-deduction instructions have a special procedure for a casualty or theft loss involving a home used for Schedule C. For the actual-expense case, they direct filers to the 2017 federal Form 8829 and its instructions for the New York calculation. For federal simplified-method users they direct the computation to Section A. New York IT-196 instructions.