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Chapter 1 Calculating Your
Time-Space Percentage
Before you start filling out your tax forms, calculate your Time-Space percentage for this
tax year. This percentage is one of the most important numbers that you will use for your
taxes because it determines how much of your key expenses you will be able to deduct as
business expenses. For example, the Time-Space percentage is used in calculating home
expenses on Form 8829, personal property depreciation expenses on Form 4562, and
shared household supplies and other expenses on Schedule C. The specific deductions
that are based on the Time-Space percentage include these:
• •
• •
• •
casualty losses
mortgage interest
real estate taxes
homeowners insurance
home repairs and maintenance
utilities •
• •
• •
• rent of a house or apartment
home depreciation
personal property depreciation
home improvements
land improvements
household supplies and toys
Since the total of these costs is usually a significant amount, it’s important to calculate
your Time-Space percentage correctly. The Tax Organizer includes worksheets that you
can use to calculate your Time-Space percentage quickly; this chapter provides a more
detailed description of that process.
Computing your Time-Space percentage is a three-step process. First you calculate
your Time percentage, then you calculate your Space percentage, and then you multiply
the two together. The formula that you will use looks like this:
# hours your home
is used for business
x Total # hours in a year
# square feet of your home
used regularly for business
= Total # square feet in your home
Time-Space percentage
Step One: Calculate Your Time Percentage
The Time percentage is how much time your home is used for your business. You calcu
late it by using the following formula:
# hours your home
is used for business
Total # hours in a year
= Time percentage
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