Actual expense method
A self-employed recordkeeping guide for users who may need to allocate real home expenses instead of using the simplified home office method.
Published by Cadus Labs LLC · Reviewed against the official IRS sources linked below.
Based on IRS Form 8829 instructions for 2025, including updates available in 2026.
The IRS uses Form 8829 to figure allowable expenses for business use of a home on Schedule C and any carryover to the next year of amounts not deductible in the current year.
The IRS says a separate Form 8829 is used for each home used for the business during the year.
Direct expenses benefit only the business part of the home. IRS instructions give examples such as painting or repairs made to the specific area or rooms used for business.
These are different from general business expenses such as supplies or advertising, which belong elsewhere on Schedule C instead of Form 8829.
Indirect expenses are for keeping up and running the entire home, and generally benefit both personal and business areas.
The business-use percentage is used to figure the deductible business portion of indirect expenses, subject to IRS limits and instructions.
The actual-expense method needs stronger home-related records than the simplified method, including the home area, business area, dates of business use, and expense documentation.
Cadus can help keep business receipts, income, invoices, mileage, and reports organized, while home allocation details and Form 8829 calculations should be handled with tax software or a tax professional.
IRS-backed tax education
Learn how the IRS home office deduction works for self-employed workers, including exclusive and regular use, simplified method, actual expenses, and Form 8829.
Home office calculation method
Learn how the IRS simplified home office deduction works, including the $5 per square foot rate, 300-square-foot limit, and recordkeeping considerations.
IRS Form 8829 instructions say not to use Form 8829 for a home when you elect the simplified method for that home for the year.
Direct expenses benefit only the business part of the home, such as repairs or painting for the specific business area.
Indirect expenses help run the entire home and generally need to be allocated by business-use percentage if they are eligible.