Kendra is a self-employed taxpayer working exclusively from her home office. Before the home office deduction, Kendra has $6,000 of net income. Her allocable home expenses are $10,000 in total. How are the home office expenses treated on her current year tax return?
A)Only $6,000 home office expenses may be deducted, resulting in net business income of zero. The remaining $4,000 of home office expenses may be carried forward and deducted in a future year against business income.
B)Only $3,000 a year of the home office expenses may be deducted.
C)All home office expenses may be deducted, resulting in a business loss of $4,000.
D)Only $6,000 of home office expenses may be deducted, resulting in a net business income of zero. None of the remaining $4,000 of home office expenses may be carried forward or deducted.

Question

Quizplus · Accepted Answer

Home office expenses are limited to the net income of the business before the deduction. Excess expenses can be carried forward to future years.

Kendra Is a Self-Employed Taxpayer Working Exclusively from Her Home