IRS Adds a Form for Home-Office Deduction

The Internal Revenue Service, seeking to get a better grip on the home-office deduction, has issued a new tax form that home workers will have to file with 1991 returns.

Form 8829 comes at a time when an increasing number of people are working from their homes, either by choice or because they have lost their jobs and are setting up consulting businesses and the like. The IRS estimated that about 4 million taxpayers will file the form for 1991.

Previously, home office-related deductions could be entered at several places on Schedule C, the form single proprietors use to report their income. The IRS had no way of figuring just how much of the listed deductions came from the home office, short of an audit. There were many audits of returns showing home-office deductions.

An IRS spokesman said that Form 8829, which basically walks the taxpayer through every step of the complicated home-office deduction, will make it easier to deduct the correct amount and will make it easy for IRS examiners to tell at a glance when someone has taken more than a fair share of deductions.