Beginning in 2018, the Business Use of Home form can only be used on the Schedule C. The IRS no longer allows the Business Use of Home form to be used on the itemized deductions.
There are 2 types of expenses that you can deduct: Direct Expenses and Indirect Expenses. Direct Expenses are those expenses that are paid only for the business part of your home. For example, if you pay for painting or repairs only in the area used for business, this would be a direct expense. Indirect Expenses are those expenses that are paid for keeping up and running your entire home. Examples of indirect expenses would be insurance and utilities for the entire home, and general home repairs. Since these are expenses you would pay for the entire home, these are considered indirect expenses.
When figuring your deduction, you need to first determine whether the expenses in question are direct or indirect.
Types of Expenses: The types of expenses that may be deducted are:
- Casualty losses
- Mortgage interest
- Real estate taxes
- Excess mortgage interest
- Repairs and maintenance
- Utilities and services
- Security systems
- Depreciation expense
For more information regarding the Business Use of Your Home, please review IRS Publication 587.