The Safe Harbor election for tangible property is the taxpayer's option to elect to expense items rather than capitalize them. This would allow the taxpayer to deduct the entire amount of expenditure in the current tax year rather than to depreciate the item over a period of time. Expenditures are then subject to a monetary limitation which is transferred as the De Minimis Safe Harbor Election.
To enter the Safe Harbor election on the Schedule E, follow the steps below:
- Federal
- Income (select my forms)
- Profit or Loss from Rentals and Royalties (reported on Schedule E)
- Enter your Schedule E Rent and Royalty information and select continue
- On the Schedule E Rentals and Royalties menu select Begin on Qualified Business Income Deduction
- Enter the Qualified Business Income Deduction (please note that any amount entered here will add or subtract from the amount calculated on your Schedule E)
- Select the option to use the amounts for the QBI Deduction
- Select the option "Electing Rev. Proc. 2018-38 Rental Safe Harbor in the drop down and then select continue to save the entry
If you elect the Safe Harbor for the tax year, you will need to paper file your return. Once you have completed all of your entries and are ready to file your return, you can access the PDF from the Summary/Print page from the left side menu and select to print your PDF. You will need to print your return which will include the Safe Harbor election page which you will need to sign and date.
For the IRS mailing address based on the state in which you live, please click here. If you are also filing a state return, the state mailing address is printed on the state returns.