Office in home vs sch A

[taxgirl]

I have a client who runs a daycare out of her home and uses the basement level exclusively. The office in home deduction isn't allowed in full on her schedule C as her income is wiped out prior to all deductions.

Can I put their mortgage interest and property tax 100% on schedule A?

[BP.]

I have a client who runs a daycare out of her home and uses the basement level exclusively. The office in home deduction isn't allowed in full on her schedule C as her income is wiped out prior to all deductions.

Can I put their mortgage interest and property tax 100% on schedule A?

TTB 5-15. Day care simplified method.

[taxgirl]

Can you bounce between simplified and actual square footage year by year?

[ATSMAN]

Can you bounce between simplified and actual square footage year by year?

Yes you can, but if you are running a Daycare the daycare method works best most of the time.

[Kram BergGold]

Yes to Bouncing

You may switch methods every year. However, if there would be non depreciation, home office carry over you would not want to use the Simplified Method as those amounts would be lost. You can't do the regular method and allocate interest and taxes to A in excess of the proper percentages.

[TaxGuyBill]

I agree, you can change back and forth, but the Simplified Method is really not a good idea for a daycare. In almost all cases, I would recommend the Actual Expenses on Form 8829 and let the unallowed expenses carry over to next year.

[ATSMAN]

I completely agree!

[BP.]

carry over . . . amounts would be lost.

TTB 5-15; Pub 587 p. 12:
Can be carried over until next regular method usage.

[taxgirl]

Thanks All!