Knowledge Base

12883: 8829 - Safe Harbor and Prior Year Carryover

1040 Individual

A taxpayer is using the safe harbor option for home office expenses this year, but there is a credit from last year. What happens to that credit?

The computation of home office expenses can be simplified by electing the simplified method.

If the taxpayer uses the simplified method on screen 8829, prior year credit cannot be used, and there is no carryover to next year. The taxpayer can use a prior year credit in a succeeding year when safe harbor is not used. See the references to using the "simplified method" in the Instructions for Instructions for Form 8829 and Publication 587, Business Use of Your Home.

The prior-year credit is not carried forward on WKs CARRY. You should note the credit on the NOTE screen in Drake Tax so a reminder will update to next year's return.

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