Office in home

[DTS]

Is it mandatory we include mortgage interest and RE taxes when figuring an OIH?

The reason I'm asking is, I have an employed client who has a very high AGI and I would like to get these two items out of the 2106 and into the A without subjecting it to the 2%.

Thanks,
Dennis

[DonPriebe]

You're in luck!

An employee taking a deduction for an office in home does NOT include any portion of the mortgage interest or property tax on Form 2106. Instead ALL of the mortgage interest and property tax is reported as usual on lines 6 and 10/11 of Schedule A.

Reference Pub 587, page 18.

[DTS]

Oih

Don,

I checked it out. Like you said, good news! None of my OIHs are for employees, all SE. This is the first one for me.

Glad you there to set me straight on this!

Thanks,
Dennis

[Kram BergGold]

Be Carefull

Even though interest and taxes are not claimed in the miscelleaneous section of Schedule A when claiming a home office they must be considered first when calculating the home office limitation based on the income earned from the activity.

[Bird Legs]

Oih

If these clients are self employed and file sched. C , then home office expenses are not reported on a 2106. If you look at the bottom of Sched. C, you will see a line for
OIH expenses and the form they are reported on.

[OldJack]

Even though interest and taxes are not claimed in the miscelleaneous section of Schedule A when claiming a home office they must be considered first when calculating the home office limitation based on the income earned from the activity.

I agree with Kram. You still have to use interest and taxes to calculate the office-in-the-home deduction regardless of where deductions are taken on some other tax form. Without considering interest and taxes the calculation on form 8829 would not be correct.

[veritas]

you could

easily disqualify the oih and then you would not have to worry about it.

[DTS]

2106

Forgive me for not getting right back to this question. Personal issues.

I took care of the calculation today and all is fine. I used the worksheet and I was able to see where the MI and RE taxes are used, but taken back out and not used for the 2106 deductible amount.

I'm very glad I asked the question because I would never have known this, as it pertains to the 2106. Now I do and will remember the next time it comes up.

Thank you all for your help!
Dennis

[S T]

OIH and form 2106 or Sched A

I have been busy too Dennis, otherwise I would have let you know.

We both use the same Tax Software, and when you bring up the form 8829, you will notice the "notations" so to speak on the form about form 2106 or sched A and to not include the mortgage interest and property taxes for an "employee" vs a "Schedule C".

Took me a while to zero in on this, but it is there.

So for your employee, only enter the items for anything other than mortgage interest and property tax.

Schedule C of course you would complete all.

And for either employee or Schedule C complete your entry on the Depreciation Schedule, and all should be fine.

Sandy

[Bird Legs]

DTS says that

"none of my OIHs are for employees, all SE."
If these are all self employed, working out of home, why would a form 2106 be required?
Only the form 8829.
The mortgage interest and property taxes would be allocated between form 8829, OIH expense and Sched. A. Mortgage interest and real estate taxes.
These would not be subject to the 2% limitation.
Will agree that I have not been thinking clearly these days. So please enlighten me
as to why a form 2106 would be used?

[Joe Btfsplk]

"none of my OIHs are for employees, all SE."
If these are all self employed, working out of home, why would a form 2106 be required?
Only the form 8829.
The mortgage interest and property taxes would be allocated between form 8829, OIH expense and Sched. A. Mortgage interest and real estate taxes.
These would not be subject to the 2% limitation.
Will agree that I have not been thinking clearly these days. So please enlighten me
as to why a form 2106 would be used?

The only reason it would go on Form 2106 would be for someone who is an employee who works at home--not self employeed. Otherwise the OIH portion would go to Schedule C thru the from 8829 and the rest would go to Schedule A WITHOUT a form 2106.

[BP.]

"none of my OIHs are for employees, all SE."
If these are all self employed, working out of home, why would a form 2106 be required?
Only the form 8829.
The mortgage interest and property taxes would be allocated between form 8829, OIH expense and Sched. A. Mortgage interest and real estate taxes.
These would not be subject to the 2% limitation.
Will agree that I have not been thinking clearly these days. So please enlighten me
as to why a form 2106 would be used?

DTS said this was an "employed client." Then when he said all of his OIH's were SE, I took that to mean "so far." Cause then he said this was his first one (meaning employed.) I believe that's why help w/ the 2106 is requested.

[Bird Legs]

OIH-Joe

Joe said "the only reason it would go on form 2106 is if they were employees working
out of their home".
The Poster did state that these were NOT employees but were self employed.
This is what confused me.
Like I said I am very easily confused these days and have been for a while.
Think that the shingles I had earlier in the year fouled me up.

[DTS]

Oih

Bird Legs,

I can see why there is confusion about this post. I'll clarify:

The only OIHs I have done in the past have been for SE clients, which would definitely go on a Sch C.

The client in my original post is an employee and that is why I needed to get this OIH, along with other expenses, into the 2106.

Sorry for the confusion. I should have been clearer in posting my question. I try, but sometimes, it just doesn't come out the way I want it to.

Dennis