Home Office Ded. / Acct. Reimbursement Plan

[bbrownatl]

S-Corp client w/ Accountable Reimbursement Plan in place did not reimburse herself for the business use of her home. Thus, I would think that she can deduct it via Sch. A but with the 2% limitation, this does not give her much benefit. I completed the 8829 but it indicates no deduction because no income on Sch. C, D or 4797. Should I just enter the income per her K-1 on Line 8 of the 8829 so that it allows the deduction? This doesn't seem right since it must come from C,D, or 4797. Anyway, just trying to maximize the deduction but it is looking like Sch A is the answer. Any thought or ideas appreciated.

Much Thanks.

[geekgirldany]

Did she pay herself distributions? I have in the past reclassified distributions to an accountable plan OIH deduction (utilities) and even mileage reimbursements. I make sure to update the minutes for them saying that the accountable plan expenses were paid at the end of the year for that particular year.

I've also had accountable plan expenses that were for the previous year paid in the next year and waited until that next year to take the deduction if cash method. Make note of it in the minutes and continue it that way.

Maybe some of the others will post on how they would do it.

[Possi]

Sch A form 8829

If you are using the Sch A, the 8829 links to the 2106. The income could be from a W2 or a K1. Doesn't the client have a W2 in addition to the K1?

If it is an office in home for a sole proprietorship, you would use the Sch C as the target for the 8829.

Remember, too, that when the 8829 is on the Sch A (2106), you can "double dip" on the Mortgage interest and Real estate tax, putting it fully on the Sch A original line, and putting the full amount on the 2106 form 8829.

[Lion]

No Double Dipping

No double dipping!

[DonPriebe]

...

Remember, too, that when the 8829 is on the Sch A (2106), you can "double dip" on the Mortgage interest and Real estate tax, putting it fully on the Sch A original line, and putting the full amount on the 2106 form 8829.

A little clarification ...

An employee reporting business use of the home as Schedule A Miscellaneous Itemized Deductions does not use a form 8829. Instead he uses a worksheet that looks similar to a 8829 except for the deductions for mortgage and property taxes.

Mortgage and property taxes are reported in full on Schedule A in the usual places - not via the OIH entry. They are entered on the OIH worksheet only to establish the limits for the rest of the OIH expenses. They don't get added into the bottom line of the OIH deduction.

See Pub 587, pages 19-20 for the rules, pages 26-28 for the worksheet and instructions.

[Gretel]

If you decided took take OIH an Sch. A you also need to have in writing that employer requires employee to have OIH as condition of employment. Just a reminder.

[Peachie]

You cannot double dip.

[QUOTE=Possi;99409
Remember, too, that when the 8829 is on the Sch A (2106), you can "double dip" on the Mortgage interest and Real estate tax, putting it fully on the Sch A original line, and putting the full amount on the 2106 form 8829.[/QUOTE]

You take the business % on the 2106 which is subject to 2%. The balance is home mortgage interest and real estate which goes to schedule A in its properr place, and not subject to 2%.

Peachie

[bbrownatl]

Basically, still on Sch. A - Subject to 2% limitation

From what I gather with the responses, there is no real way to move it off Sch. A and onto Sch C. Again, she has an LLC , paid a reasonable salary, has an accountable reimbursement plan in place, has her K-1, but just didn't reimburse for herself for her home office expenses. I was thinking that possibly she could move that home office expense to Sch C. so as to not be subject to the 2% limit. Then again, it would look pretty weird on Sch. C with only that as the expense. Thus, basically, she gets no benefit on Sch. A since the amount falls below the 2% threshold.

Any other thoughts or suggestions welcomed.

Thanks.