Updated October 28, 2026. Quick answer: This is the home office worksheet, not the pension one: the Simplified Method Worksheet for pensions and annuities is a different page, /simplified-method-worksheet/. Here the Schedule C instructions let you deduct $5 for each square foot of home used for business, up to 300 square feet, so the most the method allows is $1,500 and never more than your gross income limitation.
IRS worksheet walk-throughs: Pub 587 Line 7 Worksheet.
IRS worksheet walk-throughs: Pub 587 Area Adjustment Worksheet.
Which worksheet this is
This page is about the home office worksheet in the Instructions for Schedule C. It is not the Simplified Method Worksheet used for pension and annuity payments. The Schedule C instructions describe the method this way: “The area you use to figure your deduction cannot exceed 300 square feet.” Publication 587 has matching versions for Schedule F filers and partners; “If you are filing Schedule C (Form 1040) to report a business use of your home in your trade or business and you are using the simplified method to figure the deduction, use the Simplified Method Worksheet and the Daycare Facility Worksheet (for simplified method) in your Instructions for Schedule C for that business use.”
The election
The instructions say “You choose whether or not to use the simplified method each tax year.” and “An election for a year, once made, is irrevocable.” The alternative is Form 8829, covered at Form 8829 and Schedule C line 30.
The worksheet line by line
| Line | What the worksheet says |
|---|---|
| 1 | “Enter the amount of the gross income limitation.” |
| 2 | “Allowable square footage for the qualified business use.” “Don’t enter more than 300 square feet.” |
| 3a | “Maximum allowable amount”, printed on the worksheet as $5 |
| 3b | “For daycare facilities not used exclusively for business” enter the decimal from the Daycare Facility Worksheet; otherwise enter 1.0. |
| 3c | “Multiply line 3a by line 3b and enter the result to two decimal places” |
| 4 | “Multiply line 2 by line 3c” |
| 5 | “Allowable expenses using the simplified method. Enter the smaller of line 1 or line 4 here and include that amount on Schedule C, line 30. If zero or less, enter -0-” |
| 6a | “Operating expenses. Enter the amount from your last Form 8829, line 43 (line 42 if before 2018).” |
| 6b | “Excess casualty losses and depreciation. Enter the amount from your last Form 8829, line 44 (line 43 if before 2018).” |
Line 1: the gross income limitation
If all the gross income from your business is from the home use, the instructions give this short calculation.
| Step | What the instructions say |
|---|---|
| A | “Enter the amount from Schedule C, line 29” |
| B | “Enter any gain derived from the business use of your home and shown on Form 8949 (and included on Schedule D) or Form 4797” |
| C | “Add lines A and B” |
| D | “Enter the total amount of any losses (as a positive number) shown on Form 8949 (and included on Schedule D) or Form 4797 that are allocable to the business, but not allocable to the business use of the home” |
| E | “Gross income limitation. Subtract line D from line C.” |
The Daycare Facility Worksheet
It is needed only if the area was not used exclusively for daycare. It figures the decimal for line 3b.
| Line | What the worksheet says |
|---|---|
| 1 | “Multiply days used for daycare during the year by hours used per day” |
| 2 | “Total hours available for use during the year.” |
| 3 | “Divide line 1 by line 2. Enter the result as a decimal amount here and on line 3b of the Simplified Method Worksheet” |
Worked example
Illustration, not an IRS example. A freelancer uses 200 square feet of a spare room regularly and exclusively for the business.
| Item | Illustration |
|---|---|
| Line 1: gross income limitation (invented) | $4,000 |
| Line 2: square feet used regularly and exclusively (invented) | 200 |
| Line 3c, computed: line 3a $5 x line 3b 1.0 | $5.00 |
| Line 4, computed: line 2 x line 3c | $1,000 (computed) |
| Line 5, computed: the smaller of line 1 and line 4 | $1,000 (computed) |
Now suppose the business had less income than the space would allow:
| Item | Illustration |
|---|---|
| Line 1: gross income limitation (invented) | $700 |
| Line 4: same $1,000 as above | $1,000 |
| Line 5, computed: the smaller of line 1 and line 4 | $700 (computed) |
The deduction cannot exceed the income limitation, so it is $700 even though the space would support $1,000.
Worked example: a daycare that is not exclusive
The instructions’ own example uses “Enter 3,400 hours” for weekday and Saturday daycare hours. Dividing by a full year of hours:
| Item | Computed |
|---|---|
| Daycare line 1: 3,400 hours (the IRS instructions’ own example) | 3,400 |
| Daycare line 2, computed: 365 days x 24 hours | 8,760 |
| Daycare line 3, computed: line 1 / line 2 | 0.388 |
| Line 3c, computed: $5 x 0.388 | $1.94 |
| Line 4, computed: 300 square feet x line 3c | $582 (computed) |
The fraction is rounded to three places here, as in the illustration; the form itself asks for the result as a decimal amount.
Edition
This page reads the Instructions for Schedule C (2025) and Publication 587 (2025), the file irs.gov served on 2026-10-28 (sha256 in the kit data). It covers the 2025 return, filed in 2026. Check the tax year printed on the worksheet in your own copy and use that year’s line numbers and dollar amounts, because a different year’s worksheet can word its lines differently.
Common mistakes
- Entering more than 300 square feet. The worksheet says not to.
- Deducting last year’s carryover of unallowed expenses this year. Line 6 says you cannot deduct those amounts while you use the simplified method.
- Using the simplified method for a second home. The Schedule C instructions say you cannot use it for another home.
Related: Schedule C line 30, the home office deduction, Form 8829, and the pension Simplified Method Worksheet.
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Answer againSources
- Instructions for Schedule C (2025), Profit or Loss From Business: https://www.irs.gov/pub/irs-pdf/i1040sc.pdf
- Publication 587 (2025), Business Use of Your Home: https://www.irs.gov/pub/irs-pdf/p587.pdf
Read from the IRS documents linked above on October 28, 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.