Page 201 - Individual Forms & Instructions Guide

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The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.
from line 36 of Form 8829 on line 30 of ity losses, subtract line 30 from line 29. tory employee or notary public, see Stat-
the Schedule C you are filing for that The result is your net profit. utory employees or Notary public, later.
business. If your gross income is more than Trusts and estates. Enter the net
If you used the simplified method. If your expenses (including the expenses profit or loss on line 31 and include it on
you elect to use the simplified method you report on line 30), and you have pri- Form 1041, line 3.
for the business use of a home, complete or year unallowed passive activity los- Statutory employees. Enter your net
the additional entry spaces on line 30 for ses, do not enter your net profit on
that home only. Include the amount line 31 until you have figured the profit or loss on line 31 and include it on
Schedule 1 (Form 1040), line 3. Howev-
from line 5 of the Simplified Method amount of prior year unallowed passive
Worksheet on line 30. activity losses you may claim this year er, do not report this amount on Sched-
for this activity. Use Form 8582 to fig- ule SE, line 2. If you were a statutory
If you itemize your deductions on ure the amount of prior year unallowed employee and you are required to file
Schedule A, you may deduct your mort- passive activity losses you may include Schedule SE because of other self-em-
gage interest, real estate taxes, and casu- on line 31. Be sure to indicate that you ployment income, see the Instructions
alty losses on Schedule A as if you did are including prior year passive activity for Schedule SE.
not use your home for business. You losses by entering "PAL" to the left of
cannot deduct any excess mortgage in- the entry space. Notary public. Do not enter your net
terest, excess real estate taxes, or excess profit from line 31 on Schedule SE,
casualty losses on Schedule C for this If you checked the "No" box on line line 2, unless you are required to file
home. G, see the Instructions for Form 8582; Schedule SE because you have other
Use Part II of Schedule C to deduct you may need to include information self-employment income. See the In-
business expenses that are unrelated to from this schedule on that form, even if structions for Schedule SE.
you have a net profit.
the qualified business use of the home You can deduct one-half of
(for example, expenses for advertising, Rental real estate activity. Unless TIP your self-employment tax on
wages, or supplies, or depreciation of you are a qualifying real estate profes- Schedule 1 (Form 1040),
equipment or furniture). sional, a rental real estate activity is a line 15. See the Instructions for Sched-
passive activity, even if you materially ule SE for details.
Deduction figured on multiple
forms. If you used more than one home participated in the activity. If you have a Community income. If you and your
loss, you may need to file Form 8582 to
for a business during the year, you may apply a limitation that may reduce your spouse had community income and are
use a Form 8829 for each home or you loss. See the Instructions for Form 8582. filing separate returns, see the Instruc-
may use the simplified method for one tions for Schedule SE before figuring
home and Form 8829 for any other Reporting your net profit or loss. self-employment tax.
home. Combine the amount you figured Once you have figured your net profit or EIC. If you have a net profit on line 31,
using the simplified method and the loss, report it as follows. this amount is earned income and may
amounts you figured on your Forms If you enter a loss on line 31, qualify you for the EIC.
8829, and then enter the total on line 30 ! you may have an excess busi-
of the Schedule C you are filing for that CAUTION ness loss. Use Form 461 to fig- To figure your EIC, use the in-
business. ure your excess business loss. ! structions for Form 1040,
CAUTION line 27. Complete all applica-
Line 31 Individuals. Enter your net profit or ble steps plus Worksheet B. If you are
loss on line 31 and include it on Sched- required to file Schedule SE, remember
Figuring your net profit or loss. If ule 1 (Form 1040), line 3. Also, include to enter one-half of your self-employ-
your expenses (including the expenses your net profit or loss on Schedule SE, ment tax in Part 1, line 1d, of Worksheet
you report on line 30) are more than line 2. However, if you are a statutory B.
your gross income, do not enter your employee or notary public, see Statutory
loss on line 31 until you have applied employees or Notary public, later. Line 32
the at-risk rules and the passive activity
loss rules. To apply these rules, follow Nonresident aliens. Enter your net You do not need to complete
the instructions under Line 32, later, and profit or loss on line 31 and include it on TIP line 32 if line 7 is more than the
the Instructions for Form 8582. After Schedule 1 (Form 1040), line 3. You total of lines 28 and 30.
applying those rules, the amount on should also include this amount on
line 31 will be your loss, and it may be Schedule SE, line 2, if you are covered
smaller than the amount you figured by under the U.S. social security system At-risk rules. In most cases, if you
subtracting line 30 from line 29. due to an international social security have a business loss and amounts inves-
ted in the business for which you are not
If your gross income is more than agreement currently in effect. See the at risk, you must complete Form 6198 to
your expenses (including the expenses Instructions for Schedule SE for infor- apply a limitation that may reduce your
you report on line 30), and you do not mation on international social security loss. The at-risk rules generally limit the
have prior year unallowed passive activ- agreements. However, if you are a statu- amount of loss (including loss on the
disposition of assets) you can claim to

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