Updated October 18, 2026. Quick answer: Part I of Form 8829 turns the part of your home you use for business into a business percentage. You enter the business area on line 1 and the total area of the home on line 2, and line 3 divides one by the other. Lines 4 to 6 apply only to daycare facilities not used exclusively for business. Line 7 carries the final business percentage into the rest of the form.
Related reading on this site: IRS Publication 587.
What Part I does
The form’s Part I heading reads “Part of Your Home Used for Business”. The instructions state the purpose of the whole form in one sentence: “Use Form 8829 to figure the allowable expenses for business use of your home on Schedule C (Form 1040) and any carryover to 2026 of amounts not deductible in 2025.” The form also says “Use a separate Form 8829 for each home you used for business during the year.” This page is part of the Form 8829 walk-through.
Who the form is for
Before filling in Part I, the instructions set the basic test: “Generally, you can deduct business expenses that apply to a part of your home only if that part is exclusively used on a regular basis”. They then list the ways a space can qualify. Two exceptions to the exclusivity requirement are also described. For stored goods: “You can also deduct expenses that apply to space within your home used on a regular basis to store inventory or product samples”. For daycare: “If you use space in your home on a regular basis in the trade or business of providing daycare, you may be able to deduct the business expenses even though you use the same space for nonbusiness purposes.” The instructions send you to Pub. 587 for other ways to qualify.
Lines 1 and 2: the two areas
Line 1 is captioned “Area used regularly and exclusively for business, regularly for daycare, or for storage of inventory or product samples (see instructions)”. Line 2 is captioned “Total area of home”. On how to measure, the instructions say “To determine the area on lines 1 and 2, you can use square feet or any other reasonable method if it accurately figures your business percentage on line 7.”
One exclusion applies to line 1: “Do not include on line 1 the area of your home you used to figure any expenses allocable to inventory costs.”
Line 3: divide the business area by the total area
The caption is “Divide line 1 by line 2. Enter the result as a percentage”. As a computed illustration, not an IRS example: if line 1 were 150 square feet and line 2 were 1,000 square feet, dividing gives 0.15, which is 15 percent as a percentage.
Right after line 3 the form splits the path: “For daycare facilities not used exclusively for business, go to line 4. All others, go to line 7.”
Lines 4 to 6: daycare hours
These three lines apply only on the daycare path. Line 4 is captioned “Multiply days used for daycare during year by hours used per day”, and the instructions say “Enter the total number of hours the facility was used for daycare during the year.” Their example reads “Example. Your home is used Monday through Friday for 12 hours per day for 250 days during the year. It is also used on 50 Saturdays for 8 hours per day. Enter 3,400 hours on line 4 (3,000 hours for weekdays plus 400 hours for Saturdays).”
Line 5 is captioned “If you started or stopped using your home for daycare during the year, see instructions; otherwise, enter 8,760”. The instructions add “If you started or stopped using your home for daycare in 2025, you must prorate the number of hours based on the number of days the home was available for daycare.” They continue “Instead, multiply 24 hours by the number of days available and enter the result.”
Line 6 is captioned “Divide line 4 by line 5. Enter the result as a decimal amount”.
Line 7: the business percentage
Line 7 is captioned “Business percentage. For daycare facilities not used exclusively for business, multiply line 6 by line 3 (enter the result as a percentage). All others, enter the amount from line 3”. For a daycare facility with some areas used only partly for business, the instructions say “you cannot figure your business percentage using Part I.” They give a three-step method that ends by telling you to “Attach a statement with your computation” and write a note above the line 7 percentage. Read that paragraph in the instructions if it applies.
Where the number comes from
Both areas come from your own measurements of the home, using the method the instructions allow. Line 3 and line 7 are calculated from them. The business income that the later lines compare against is explained on the Schedule C page, and the broader rules for the deduction are covered at home office deduction.
Where it goes next
The line 7 percentage is used again further down the form. Line 13 is captioned “Multiply line 12, column (b), by line 7”, line 24 is captioned “Multiply line 23, column (b), by line 7”, and line 40 is captioned “Business basis of building. Multiply line 39 by line 7”. Those steps are explained on the lines 8 to 15, lines 16 to 27 and lines 37 to 44 pages.
Edition and line numbers
This page reads the 2025 Form 8829, Expenses for Business Use of Your Home and its 2025 instructions, the current files irs.gov served on 2026-10-18. They are the files for the tax year 2025 return, filed in 2026. The form’s own header says “File only with Schedule C (Form 1040).” Check the tax year printed on the form you are filling in and use the line numbers on that year’s form, because a different year’s form can number or word its lines differently.
Common mistakes
- Counting inventory space on line 1. The instructions say “Do not include on line 1 the area of your home you used to figure any expenses allocable to inventory costs.”
- Filling in lines 4 to 6 for a home office. The form says “For daycare facilities not used exclusively for business, go to line 4. All others, go to line 7.”
- Entering 8,760 when daycare began or ended during the year. The instructions say “Do not enter 8,760.” and tell you to prorate the hours instead.
Related: Form 8829, home office deduction, Schedule C, Schedule C line 30, and Form 8829 lines 8 to 15.
Sources
- Instructions for Form 8829, Expenses for Business Use of Your Home (2025): https://www.irs.gov/pub/irs-pdf/i8829.pdf
- Form 8829, Expenses for Business Use of Your Home (2025): https://www.irs.gov/pub/irs-pdf/f8829.pdf
Read from the IRS documents linked above on October 18, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the account provider or the IRS is the right place to confirm anything consequential.