Worksheet To Figure the Deduction for Business Use of Your Home

This worksheet is to be used by taxpayers filing Schedule F (Form 1040) or by partners with certain unreimbursed ordinary and necessary expenses if using actual expenses to figure the deduction. If you are using the simplified method to figure your deduction, use the Simplified Method Worksheet, later.

Instructions for the Worksheet To Figure the Deduction for Business Use of Your Home

The Worksheet To Figure the Deduction for Business Use of Your Home is to be used by taxpayers filing Schedule F (Form 1040) or by partners with certain unreimbursed or- dinary and necessary expenses if using actual expenses to figure the deduction. The following instructions explain how to complete each part of the worksheet.

Partners. See Partners under Where To Deduct, earlier, before completing the worksheet.

Caution: If you file Schedule C (Form 1040) or Schedule C (Form 1040) with Form 1040-SS and use actual expenses to figure your deduction, use Form 8829 instead of this worksheet.

Part 1—Part of Your Home Used for Business

Lines 1–3. If you figure the percentage based on area, use lines 1 through 3 to figure the business-use percentage. Enter the percentage on line 3.

You can use any other reasonable method that accurately reflects your business-use percentage. If you operate a daycare facility and you meet the exception to the exclusive use test for part or all of the area you use for business, you must figure the business-use percentage for that area as explained under Daycare Facility, earlier. If you use another method to figure your business percentage, skip lines 1 and 2 and enter the percentage on line 3.

Part 2—Figure Your Allowable Deduction

Line 4. If you file Schedule F (Form 1040), enter your total gross income that is related to the business use of your home. This would generally be the amount on line 9 of Schedule F (Form 1040).

Lines 5–7. Use lines 5, 6, and 7 for business use of the home expenses that would have been deductible as a personal expense if you had not used your home for busi

ness. These expenses include certain casualty losses, mortgage interest, and real estate taxes.

Taxpayers claiming the standard deduction. If you claim the standard deduction, you will not include any mortgage interest, or real estate taxes on lines 6 and 7; instead, you will claim the entire business use of the home portion of those expenses using lines 14 and 15. If you are not increasing your standard deduction by a net qualified disaster loss, then you will not include any casualty losses on line 5; instead, you will claim the entire business use of the home portion of your casualty losses on line 27. If you are filing Schedule A to increase your standard deduction by a net qualified disaster loss, see Casualty losses repor- ted on line 5, later.

Tip: You may prefer to itemize your deductions on Schedule A to claim amounts on lines 5, 6, and 7, even if your total personal deductions are less than the standard deduction.

Casualty losses reported on line 5. Figure the amount to include in column (b) of line 5 as follows.

Step 1. Complete a worksheet version of Section A of Form 4684 treating all your casualty losses (and gains) as personal expenses. If you are itemizing your deductions, when completing line 17 of this worksheet version of Form 4684, enter 10% of your adjusted gross income excluding the gross income and deductions attributable to the business use of the home. Do not file this worksheet version of Form 4684; instead, keep it for your records. You will complete a separate Form 4684 to attach to your return using only the personal portion of your casualty losses (and gains) for Section A.

Step 2. Include in column (b) of line 5 the loss amounts from lines 15 and 18 of this worksheet version of Form 4684 that are attributable to the home in which you conducted the business and are the result of a federally declared disaster. If you are claiming an increased standard deduction instead of itemizing your deductions, only use a net qualified disaster loss on line 15 of the worksheet version of Form 4684 for this Step 2.

See the instructions for line 33, later, for the business use of the home casualty losses that you must include in Section B of the separate Form 4684 you attach to your return.

Casualty losses reported on Schedule A. Use only the personal portion of your casualty losses (and gains) when completing Section A of the separate Form 4684 you attach to your return. The separate Form 4684 you attach to your return is used to figure the casualty losses you can include on line 15 of Schedule A and the net qualified disaster losses you can include on line 16 of Schedule A.

Excess casualty losses. See the instructions for line 27, later, to deduct the part of your casualty losses for business use of your home not allowed because of the limits on deducting casualty losses as a personal expense, including any losses that are not the result of a federally declared disaster.

20 Publication 587 (2025)

Worksheet To Figure the Deduction for Business Use of Your Home Keep for Your Records

Use this worksheet if you file Schedule F (Form 1040) or you are a partner, and you are using actual expenses to figure your deduction for business use of the home. Use a separate worksheet for each qualified business use of your home.

PART 1—Part of Your Home Used for Business:

1. Area of home used for business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1)
2. Total area of home . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2)
3. Percentage of home used for business (divide line 1 by line 2 and show result as percentage) . . . . . 3) %

PART 2—Figure Your Allowable Deduction

4. Gross income from business (see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4) (a) (b) Direct Indirect Expenses Expenses

(a) (b) Direct Indirect Expenses Expenses

5. Casualty losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5)

6. Deductible mortgage interest . . . . . . . . . . . . . . . . . . . . . . . . . 6)

7. Real estate taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7)

8. Total of lines 5 through 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8)

9. Multiply line 8, column (b), by line 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9)

10. Add line 8, column (a), and line 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10)

11. Business expenses not from business use of home (see instructions) . . . . . . . . . 11)

12. Add lines 10 and 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12)

13. Deduction limit. Subtract line 12 from line 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13)

14. Excess mortgage interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14)

15. Excess real estate taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15)

16. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16)

17. Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17)

18. Repairs and maintenance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18)

19. Utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19)

20. Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20)

21. Add lines 14 through 20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21)

22. Multiply line 21, column (b), by line 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22)

23. Carryover of operating expenses from prior year (see instructions) . . . . . . . . . . . . 23)

24. Add line 21, column (a), line 22, and line 23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24)

25. Allowable operating expenses. Enter the smaller of line 13 or line 24 . . . . . . . . . . . . . . . . . . . . . . . . . 25)

26. Limit on excess casualty losses and depreciation. Subtract line 25 from line 13 . . . . . . . . . . . . . . . . . 26)

27. Excess casualty losses (see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27)

28. Depreciation of your home from line 40 below . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28)

29. Carryover of excess casualty losses and depreciation from prior year (see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29)

30. Add lines 27 through 29 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30)

31. Allowable excess casualty losses and depreciation. Enter the smaller of line 26 or line 30 . . . . . . . . 31)

32. Add lines 10, 25, and 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32)

33. Casualty losses included on lines 10 and 31 (see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33)

34. Allowable expenses for business use of your home. (Subtract line 33 from line 32.) See instructions for where to enter on your return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34)

PART 3—Depreciation of Your Home

35. Smaller of adjusted basis or fair market value of home (see instructions) . . . . . . . . . . . . . . . . . . . . . . . 35)
36. Basis of land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36)
37. Basis of building (subtract line 36 from line 35) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37)
38. Business basis of building (multiply line 37 by line 3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38)
39. Depreciation percentage (from applicable table or method) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39) %
40. Depreciation allowable (multiply line 38 by line 39) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40)

PART 4—Carryover of Unallowed Expenses to Next Year

41. Operating expenses. Subtract line 25 from line 24. If less than zero, enter -0- . . . . . . . . . . . . . . . . . . . 41)
42. Excess casualty losses and depreciation. Subtract line 31 from line 30. If less than zero, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42)

Publication 587 (2025) 21

Mortgage interest reported on line 6. If you are claiming the standard deduction, do not report an amount on line 6. If you itemize your deductions, figure the amount to include in column (b) of line 6 as follows.

Step 1. Treat all the mortgage interest you paid as a personal expense and figure the amount that would be deductible as an itemized deduction on Schedule A. See Pub. 936 for more information about figuring the home mortgage interest deduction and the limits that may apply.

Step 2. Include in column (b) of line 6 the amount of deductible mortgage interest figured in Step 1 that is attributable to the home in which you conducted the business. Because the limits on deducting mortgage interest as a personal expense are figured using all loans secured by your home(s), do not claim mortgage interest in column (a) as a direct expense, even if you use a separate structure in your home in connection with your trade or business.

Mortgage interest reported on Schedule A. When you figure your itemized deduction for mortgage interest on Schedule A, include the following amounts of deductible mortgage interest that you figured in Step 1 to the extent they are not deducted on another form, such as Schedule E, as a rental expense.

• The amount of deductible mortgage interest you figured in Step 1 that is not attributable to the home in which you conducted the business.

• The personal portion of deductible mortgage interest you included in column (b) of line 6. For example, if your business percentage on line 3 is 30%, 70% of the amount you included in column (b) of line 6 is deductible as an itemized deduction on Schedule A.

Excess mortgage interest. See the instructions for line 14, later, to deduct the part of your mortgage interest from loans used to buy, build, or substantially improve the home in which you conducted business that is not allowed on line 6 because of the limits on deducting home mortgage interest as a personal expense.

Real estate taxes reported on line 7. If you are claiming the standard deduction, do not report an amount on line 7. If you are itemizing deductions, figure the amount to include on line 7 as follows.

Step 1. If the total of your state and local income (or if elected on your Schedule A, general sales) taxes, real estate taxes, and personal property taxes is not more than $10,000 ($5,000 if married filing separately), enter all the real estate taxes attributable to the home in which you conducted business in column (b) of line 7.

Step 2. If you do not meet the condition of Step 1, use the following worksheet to figure the amount to include in column (a) of line 7.

Line 7 Worksheet

1. Enter your state and local income taxes (or, if you elect on Schedule A, your state and local general sales taxes) that are personal expenses . . . . . . 1.

2. Enter all the state and local real estate taxes you paid on the home in which you conducted business . . . . . . . . . . . . . . . . . . . . . . . . . 2.

3. Enter any other state and local real estate taxes you paid that are a personal expense and not included on line 2 . . . . . . . . . . . . . . . . . . . . 3.

4. Enter your state and local personal property taxes that are a personal expense . . . . . . . . . . 4.

5. Add lines 1 through 4 . . . . . . . . . . . . . . . . . 5.

6. Multiply line 2 by the percentage on line 3 of the Worksheet To Figure the Deduction for Business Use of Your Home . . . . . . . . . . . . . . . . . . . 6.

7a. Subtract line 6 from line 5 . . . . . . . . . . . . . . . 7a.

7b. Is line 5 less than or equal to $10,000 ($5,000 if married filing separately)?

Yes. Skip lines 7c and 7d. Enter $10,000 ($5,000 if married filing separately) on line 8. Then proceed to line 9.

No. Go to line 7c. 7c. Is line 7a greater than or equal to $40,000 ($20,000 if married filing separately)?

Yes. Skip line 7d. Enter $10,000 ($5,000 if married filing separately) on line 8. Then proceed to line 9.

No. Go to line 7d. 7d. Would your modified adjusted gross income on line 4 of the State and Local Tax Deduction Worksheet in the Instructions for Schedule A (Form 1040) be less than or equal to $500,000 ($250,000 if married filing separately) if you entered $40,000 ($20,000 if married filing separately) on line 8 of this worksheet, next?

Yes. Enter $40,000 ($20,000 if married filing separately) on line 8. Then proceed to line 9.

No or Unsure. See Iteration instructions, later. 8. Enter the overall limit on the deduction for state and local income, sales, and property taxes from line 7b, 7c, 7d, or Step 6 of the Iteration instructions (as applicable). . . . . . . . . . . . . . . 8.

9. Subtract line 7a from line 8. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . 9.

10. Real estate taxes reported on line 7. Enter the smaller of line 6 or line 9 here and in column (a) of line 7 of the Worksheet To Figure the Deduction for Business Use of Your Home . . . . 10.

11. Excess real estate taxes reported on line 15. Subtract line 10 from line 6 . . . . . . . . . . . . . . 11.

22 Publication 587 (2025)

Real estate taxes reported on Schedule A. When you figure your itemized deduction for state and local taxes on Schedule A, only include the personal portion of your real estate taxes on line 5b of Schedule A.

Excess real estate taxes. See the instructions for line 15, later, to deduct the part of your real estate taxes for the home in which you conducted business that is not allowed on line 7 because of the limitation on deducting state and local taxes as a personal expense.

Iteration instructions. Use these instructions if you answered “No” on line 7d of the Line 7 Worksheet, earlier.

Step 1. Enter $10,000 ($5,000 if married filing separately) on line 8 of the Line 7 Worksheet.

Step 2. Complete lines 9, 10, and 11 of the Line 7 Worksheet. Use the results from the Line 7 Worksheet to complete the Worksheet to Figure the Deduction for Business Use of Your Home. Then use the results from the Worksheet to Figure the Deduction for Business Use of Your Home to determine the deduction for expenses for business use of your home on Schedule F, line 32. If you are a partner deducting unreimbursed partnership expenses, include the results in the appropriate column of Schedule E, line 28. See Partners under Where To De- duct, earlier.

Step 3. Schedule E filers. Determine your total partnership income or loss on line 32 using the amount from Step 2. Complete Schedule E, then figure any passive activity losses (Form 8582); net operating loss (Schedule 1, line 8a); self-employment tax (Schedule SE); the deduction for one-half of self-employment tax (Schedule 1, line 15); self-employed SEP, SIMPLE, and qualified plans deduction (Schedule 1, line 16); self-employed health insurance deduction (Schedule 1, line 17); IRA deduction (Schedule 1, line 20); student loan interest deduction (Schedule 1, line 21); adjustments to income (Schedule 1, line 26); and adjusted gross income (Form 1040 or 1040-SR, line 11a). Schedule F filers. Determine your net profit (or loss) on line 34 using the amount from Step 2. Then figure your net operating loss (Schedule 1, line 8a); self-employment tax (Schedule SE); the deduction for one-half of self-employment tax (Schedule 1, line 15); IRA deduction (Schedule 1, line 20); student loan interest deduction (Schedule 1, line 21); adjustments to income (Schedule 1, line 26); and adjusted gross income (Form 1040 or 1040-SR, line 11a).

Step 4. Enter the adjusted gross income amount determined in Step 3 on line 2 of the State and Local Tax Deduction Worksheet in the Instructions for Schedule A (Form 1040). Figure your modified adjusted gross income on line 4 of the State and Local Tax Deduction Worksheet.

• If this is the first time you completed Step 4, continue to Step 5.

• If you are repeating Step 4, compare the current calculation of modified adjusted gross income from this step with the most recent prior calculation of modified adjusted gross income from this step. Is the difference between the current calculation of modified adjusted

gross income and the most recent prior calculation of adjusted gross income more than $1?

1. Yes. Continue to Step 5.

2. No. Use the deduction for expenses for business use of your home determined in Step 2; the amounts determined in Step 3; the modified adjusted gross income determined in Step 4; and the overall limit on the deduction for state and local income, sales, and property taxes determined in the most recent calculation in Step 5 to complete your return. STOP.

Step 5. Use the modified adjusted gross income determined in Step 4 to compute the overall limit on the deduction for state and local income, sales, and property taxes on line 9 of the State and Local Tax Deduction Worksheet in the Instructions for Schedule A (Form 1040).

Step 6. Enter the overall limit on the deduction for state and local income, sales, and property taxes determined in Step 5 on line 8 of the Pub. 587 Line 7 Worksheet. Repeat Steps 2 through 4.

Lines 9 and 10. Multiply your total indirect expenses (line 8, column (b)) by the business percentage from line 3. Enter the result on line 9. Add this amount to the total direct expenses (line 8, column (a)) and enter the total on line 10.

Lines 11–13. Enter any other business expenses that are not attributable to business use of the home on line 11. Farmers should generally enter their total farm expenses before deducting office-in-the-home expenses. Do not enter the deductible part of your self-employment tax. Add the amounts on lines 10 and 11, and enter the total on line 12. Subtract line 12 from line 4, and enter the result on line 13. This is your deduction limit. You use it to determine whether you can deduct any of your other expenses for business use of the home this year. If you cannot, you will carry them over to the next year in which you use actual expenses to figure the deduction.

If line 13 is zero or less, enter -0-. Deduct your expenses for deductible home mortgage interest, real estate taxes, casualty losses, and any business expenses not attributable to use of your home on the appropriate lines of the schedule(s) for Form 1040 or Form 1040-SR, as explained earlier under Where To Deduct .

Lines 14–23. On lines 14 through 20, enter your otherwise nondeductible expenses for the business use of your home. These include utilities, insurance, repairs, and maintenance. If you rent, report the amount paid on line 17. In column (a), enter the expenses that benefit only the business part of your home (direct expenses). In column (b), enter the expenses that benefit the entire home (indirect expenses). Multiply line 21, column (b), by the business-use percentage (line 3) and enter this amount on line 22.

If you deducted actual expenses for the business use of your home on your 2024 tax return, enter on line 23 the amount from line 41 of your 2024 worksheet. If you used the simplified method in 2024, enter on line 23 the amount from line 6a of your 2024 Simplified Method Worksheet.

Publication 587 (2025) 23

Line 14—Excess home mortgage interest. If you are claiming the standard deduction, enter all the home mortgage interest paid for loans used to buy, build, or substantially improve the home in which you conducted business in column (b) of line 14. Do not include mortgage interest on a loan that did not benefit your home (for example, a home equity loan used to pay off credit card bills, to buy a car, or to pay tuition costs).

If you are itemizing deductions on Schedule A and the amount you figured in Step 1 under Mortgage interest re- ported on line 6, earlier, was less than the full amount of interest you paid because of the limits on deducting home mortgage interest as a personal expense, include the excess attributable to the loans used to buy, build, or substantially improve the home in which you conducted business in column (b) of line 14.

Example. If you paid $15,000 of home mortgage interest on loans used to buy, build, or substantially improve the home in which you conducted business but would only be able to deduct $12,000 on Schedule A because of the limits that apply to deducting home mortgage interest as a personal expense, include $3,000 ($15,000 - $12,000 = $3,000) in column (b) of line 14.

Line 15—Excess real estate taxes. If you are claiming the standard deduction, enter all the real estate taxes paid on the home in which you conducted business in column (b) of line 15.

If you are itemizing deductions on Schedule A and you used the Line 7 Worksheet to figure the amount to include in column (a) of line 7, then include the amount from line 11 of the Line 7 Worksheet in column (a) of line 15 of the Worksheet To Figure the Deduction for Business Use of Your Home; otherwise, do not enter an amount on line 15.

Lines 26–31. On lines 26 through 31, figure your limit on deductions for excess casualty losses and depreciation.

If you deducted actual expenses for business use of your home on your 2024 tax return, enter on line 29 the amount from line 42 of your 2024 worksheet. If you used the simplified method in 2024, enter on line 29 the amount from line 6b of your 2024 Simplified Method Worksheet.

Line 27—Excess casualty loss. Multiply the casualty losses attributable to the home in which you conducted business that are in excess of the amount reported on line 5 (if any) by the business percentage of those losses and enter the result.

Lines 32–34. On line 32, total all allowable business-use-of-the-home deductions.

On line 33, enter the total of the casualty losses shown on lines 10 and 31. Enter the amount from line 33 on line 27 of Form 4684, Section B. Attach a statement to your tax return showing how you calculated the deductible loss (you can use the worksheet as your attachment) and enter "See attached statement" above line 27 of Form 4684. See the Instructions for Form 4684 for more information on completing that form.

Line 34 is the total (other than casualty losses) allowable as a deduction for business use of your home. If you

file Schedule F (Form 1040), enter this amount on line 32, Other expenses, and enter “Business Use of Home” on the line beside the entry. Do not add the specific expenses into other line totals of Part II of Schedule F (Form 1040).

If you are a partner, see Where To Deduct , earlier, for information on how to claim the deduction.

Part 3—Depreciation of Your Home

Figure your depreciation deduction on lines 35 through 40. On line 35, enter the smaller of the adjusted basis or the fair market value of the property at the time you first used it for business. Do not adjust this amount for changes in basis or value after that date. Allocate the basis between the land and the building on lines 36 and 37. You cannot depreciate any part of the land. On line 39, enter the correct percentage for the current year from the tables in Pub. 946. Multiply this percentage by the business basis to get the depreciation deduction. Enter this figure on lines 40 and 28. Complete and attach Form 4562 to your return if this is the first year you used your home, or an improvement or addition to your home, for business.

Part 4—Carryover of Unallowed Expenses to Next Year

Complete these lines to figure the expenses that must be carried forward to the next year in which you use actual expenses.