Question

Peter operates a dental office in his home. The office occupies 250 square feet of his residence, which is a total of 1,500 square feet. During 2018, Peter pays rent for his home of $12,000, utilities of $4,800, and maintenance expenses of $1,200. What amount of the total expenses should be allocated to the home office?

Answer 1

Answer:

$3,000

Explanation:

Per IRS form 8829, allocation of total expense to home office can be arrived by dividing the total usable area of home by the work area to get the percentage of expenses allocable to home office.

So, 250 square feet / 1500 square feet = 16.6666666%

Total expenses incurred;

Rent $12,000

Utilities 4,800

Maintenance 1,200

—————

Total $18,000x16.6666666%=$3,000

or simply, $18,000 x 250/1500 = $3,000 (to be exact in decimal points)