Userid: CPM Schema: tipx Leadpct: 100% Pt. size: 10 Draft Ok to Print AH XSL/XML Fileid: … tions/P587/2020/A/XML/Cycle04/source (Init. & Date) _______ Page 1 of 34 13:04 - 14-Jan-2021 The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing. Department of the Treasury Contents Internal Revenue Service Future Developments ....................... 1 Publication 587 Reminders ............................... 1 Cat. No. 15154T Introduction .............................. 2 Qualifying for a Deduction ................... 2 Exclusive Use .......................... 3 Business Use Regular Use ............................ 3 Trade or Business Use .................... 3 of Your Home Principal Place of Business ................. 3 Place To Meet Patients, Clients, or Customers ........................... 5 (Including Use by Separate Structure ....................... 6 Daycare Providers) Figuring the Deduction ...................... 6 Using Actual Expenses .................... 6 For use in preparing Using the Simplified Method ............... 10 2020 Returns Daycare Facility .......................... 12 Sale or Exchange of Your Home ............. 14 Business Furniture and Equipment ........... 16 Recordkeeping ........................... 18 Where To Deduct ......................... 18 Self-Employed Persons ................... 18 Partners .............................. 20 Worksheet To Figure the Deduction for Business Use of Your Home .............. 20 Worksheets To Figure the Deduction for Business Use of Your Home (Simplified Method) ............................. 24 How To Get Tax Help ...................... 28 Exhibit A. Family Daycare Provider Meal and Snack Log ........................... 32 Index .................................. 33 Future Developments For the latest information about developments related to Pub. 587, such as legislation enacted after it was published, go to IRS.gov/Pub587. Reminders Simplified method for business use of home deduc- tion. The IRS provides a simplified method to figure your expenses for business use of your home. For more infor- mation, see Using the Simplified Method under Figuring Get forms and other information faster and easier at: the Deduction, later. • IRS.gov (English) • IRS.gov/Korean (한국어) • IRS.gov/Spanish (Español) • IRS.gov/Russian (Pусский) Photographs of missing children. The Internal Reve- • IRS.gov/Chinese (中文) • IRS.gov/Vietnamese (TiếngViệt) nue Service is a proud partner with the National Center for Jan 14, 2021 Page 2 of 34 Fileid: … tions/P587/2020/A/XML/Cycle04/source 13:04 - 14-Jan-2021 The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing. Missing & Exploited Children® (NCMEC). Photographs of Although we can’t respond individually to each com- missing children selected by the Center may appear in ment received, we do appreciate your feedback and will this publication on pages that would otherwise be blank. consider your comments and suggestions as we revise You can help bring these children home by looking at the our tax forms, instructions, and publications. Do not send photographs and calling 800-THE-LOST (800-843-5678) tax questions, tax returns, or payments to the above ad- if you recognize a child. dress. Getting answers to your tax questions. If you have a tax question not answered by this publication or the How Introduction To Get Tax Help section at the end of this publication, go to the IRS Interactive Tax Assistant page at IRS.gov/ The purpose of this publication is to provide information Help/ITA where you can find topics by using the search on figuring and claiming the deduction for business use of feature or viewing the categories listed. your home. The term “home” includes a house, apartment, condominium, mobile home, boat, or similar property Getting tax forms, instructions, and publications. which provides basic living accommodations. It also in- Visit IRS.gov/Forms to download current and prior-year cludes structures on the property, such as an unattached forms, instructions, and publications. garage, studio, barn, or greenhouse. However, it does not Ordering tax forms, instructions, and publications. include any part of your property used exclusively as a ho- Go to IRS.gov/OrderForms to order current forms, instruc- tel, motel, inn, or similar establishment. tions, and publications; call 800-829-3676 to order Qualifying for a Deduction gives the requirements for prior-year forms and instructions. The IRS will process qualifying to deduct expenses for the business use of your your order for forms and publications as soon as possible. home (including special rules for storing inventory or prod- Do not resubmit requests you’ve already sent us. You can uct samples). For special rules that apply to daycare pro- get forms and publications faster online. viders, see Daycare Facility. After you determine that you qualify for the deduction, Useful Items Figuring the Deduction explains the expenses you can de- You may want to see: duct using either your actual expenses or the simplified method. The simplified method is an alternative to calcu- Publication lating and substantiating actual expenses. Where To Deduct explains where a self-employed per- 523 523 Selling Your Home son or partner will report the deduction. This publication also includes information on the follow- 551 551 Basis of Assets ing. 583 583 Starting a Business and Keeping Records • Selling a home that was used partly for business. 946 946 How To Depreciate Property • Deducting expenses for furniture and equipment used in your business. Form (and Instructions) • Records you should keep. Schedule C (Form 1040) Schedule C (Form 1040) Profit or Loss From Finally, this publication contains worksheets to help you Business figure the amount of your deduction if you use your home 4562 4562 Depreciation and Amortization in your farming business and you are filing Schedule F (Form 1040) or you are a partner and the use of your 8829 8829 Expenses for Business Use of Your Home home resulted in unreimbursed ordinary and necessary expenses that are trade or business expenses under sec- tion 162 and that you are required to pay under the part- Qualifying for a Deduction nership agreement. If you used your home for business and you are filing Schedule C (Form 1040), you will use Generally, you cannot deduct items related to your home, either Form 8829 or the Simplified Method Worksheet in such as mortgage interest, real estate taxes, utilities, your Instructions for Schedule C. maintenance, rent, depreciation, or property insurance, as The rules in this publication apply to individuals. business expenses. However, you may be able to deduct If you need information on deductions for renting out expenses related to the business use of part of your home your property, see Pub. 527, Residential Rental Property. if you meet specific requirements. Even then, the deducti- Comments and suggestions. We welcome your com- ble amount of these types of expenses may be limited. ments about this publication and suggestions for future Use this section and Figure A to decide if you can deduct editions. expenses for the business use of your home. You can send us comments through IRS.gov/ To qualify to deduct expenses for business use of your FormComments. Or, you can write to the Internal Reve- home, you must use part of your home: nue Service, Tax Forms and Publications, 1111 Constitu- tion Ave. NW, IR-6526, Washington, DC 20224. • Exclusively and regularly as your principal place of business (see Principal Place of Business, later); Page 2 Publication 587 (2020) Page 3 of 34 Fileid: … tions/P587/2020/A/XML/Cycle04/source 13:04 - 14-Jan-2021 The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing. • Exclusively and regularly as a place where you meet Example. Your home is the only fixed location of your or deal with patients, clients, or customers in the nor- business of selling mechanics' tools at retail. You regularly mal course of your trade or business; use half of your basement for storage of inventory and • In the case of a separate structure which is not at- product samples. You sometimes use the area for per- tached to your home, in connection with your trade or sonal purposes. The expenses for the storage space are business; deductible even though you do not use this part of your basement exclusively for business. • On a regular basis for certain storage use (see Stor- age of inventory or product samples, later); Regular Use • For rental use (see Pub. 527); or To qualify under the regular use test, you must use a spe- As a daycare facility (see Daycare Facility, later). • cific area of your home for business on a regular basis. In- cidental or occasional business use is not regular use. Exclusive Use You must consider all facts and circumstances in deter- mining whether your use is on a regular basis. To qualify under the exclusive use test, you must use a specific area of your home only for your trade or business. The area used for business can be a room or other sepa- Trade or Business Use rately identifiable space. The space does not need to be marked off by a permanent partition. To qualify under the trade-or-business-use test, you must use part of your home in connection with a trade or busi- You do not meet the requirements of the exclusive use ness. If you use your home for a profit-seeking activity that test if you use the area in question both for business and is not a trade or business, you cannot take a deduction for for personal purposes. its business use. Example. You are an attorney and use a den in your Example. You use part of your home exclusively and home to write legal briefs and prepare clients' tax returns. regularly to read financial periodicals and reports, clip Your family also uses the den for recreation. The den is bond coupons, and carry out similar activities related to not used exclusively in your trade or business, so you your own investments. You do not make investments as a cannot claim a deduction for the business use of the den.