More On Home Business Expenses: Where to File

After my sister Carol and I reviewed her ability to deduct home business expenses, she asked, "If I am an LLC, where do I deduct this - on my personal deductions, or on my LLC tax form?"

She is not alone in her confusion. It is difficult to sort out how and where to put certain information on your tax forms. Some clarification is in order:

• First, you need to know how each type of business files its tax returns
  
  
• If you are a sole proprietor using Schedule C (Form 1040), use Form 8829 Expenses for Business Use of Your Home to enter this information. Since a single-member limited liability company (LLC) files its taxes as a sole proprietorship, Form 8829 would also be used.
  
  
• Multiple-member LLC's and partnerships would use Schedule E (Form 1040) Supplemental Income and Loss to deduct unreimbursed partnership expenses.
  
  
• Corporations would not deduct home business expenses, but employees who work at home may be able to deduct un-reimbursed expenses.

Since Carol is a single member LLC, she would first complete Form 8829. Her total allowable expenses for business use of her home would go onto Schedule C. Then, the total net income (or loss) from her business would go on to her 1040.