What this line means
The total cost of utilities for your entire home during the year — electricity, gas, water, sewer, trash removal, and similar services. This is an indirect expense. The form multiplies your total utility costs by your business-use percentage (line 3) to determine the deductible business portion. Unlike mortgage interest and real estate taxes, utility costs are subject to the tentative profit limit on line 8. If your business profit is too low, excess utility deductions carry forward to next year.
Does this apply to you?
- You pay electricity, gas, water, or other utility bills for the home where your office is located
- You use heating, cooling, or lighting in your home office as part of running your business
- You are claiming the home office deduction using the regular method (Form 8829)
Easy to overlook
Internet and phone service are utilities Your home internet bill and the business portion of your phone bill are utility expenses. Filers often forget to include internet service on line 22, even though it is essential to most home-based businesses. If you use one internet connection for both business and personal purposes, include the full cost on line 22 — the business-use percentage on line 3 handles the allocation automatically. 1 IRS Form 8829 instructions — Line 22
Security system monitoring fees qualify Monthly payments for a home security monitoring service are a utility-type expense. If you have a security system that protects your home office and the rest of your house, the cost goes on line 22 as an indirect expense. A system installed solely to protect a business area (like a warehouse section of your home) is a direct expense and is 100% deductible without applying the business-use percentage. 2 IRS Publication 587 — utility expenses for business use of home
Watch out for this
Double-counting utilities that you already claimed elsewhere. If you deducted a business phone line on Schedule C, line 25 (Utilities for a separate business location), do not also include that same phone bill on Form 8829, line 22. Form 8829 is only for expenses related to your home. A dedicated business phone billed to a separate business address belongs on Schedule C directly, not here.
Footnotes
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IRS Form 8829 Instructions, Line 22. https://www.irs.gov/instructions/i8829 ↩
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IRS Publication 587, Business Use of Your Home, Indirect Expenses. https://www.irs.gov/pub/irs-pdf/p587.pdf ↩