If you use property or equipment for a business or rental activity, you may be able to deduct its cost over time through depreciation. Enter your assets in the program, and it will calculate the depreciation based on the information you provide.
How to Enter Depreciation in the Program
Follow these steps to access the depreciation section:
- Go to Federal.
- Select Income (Select My Forms).
- Choose either:
- Profit or Loss From a Business (Schedule C), or
- Profit or Loss From Rentals and Royalties (Schedule E).
- Select Edit or Add for the applicable Schedule C or Schedule E activity.
- Choose Depreciation.
- Select Assets.
Once you're in the depreciation section, you'll enter information about each asset you want to depreciate.
Depreciation Entry Fields Explained
Description of Asset
Enter a name or description that helps you identify the asset. For example, "Rental House," "Office Computer," or "Business Vehicle."
Date Placed in Service
Enter the date you first began using the asset for business or rental purposes. This is not always the purchase date if the asset was put to work later.
Cost
Enter the asset's cost basis. In some situations, such as converting personal property to rental use, you may need to use the fair market value instead of the original purchase price.
Percentage of Business Use
Enter the percentage of time the asset is used for business or rental purposes.
- Enter 100% if the asset is used exclusively for your rental activity.
- If the asset has both personal and business use, enter only the business-use percentage.
Section 179 Deduction
Section 179 allows eligible taxpayers to deduct part or all of the cost of certain qualifying business property in the year it is placed in service instead of depreciating it over several years.
Not all assets qualify. For details, see IRS Publication 946.
Prior Year Special Depreciation
If you claimed special depreciation allowance (often called bonus depreciation) when the asset was first placed in service, enter the amount previously claimed here.
Accumulated Depreciation
Enter the total depreciation claimed on the asset in prior years. If this is the first year you are depreciating the asset, leave this field blank.
Depreciation Method
Choose the depreciation method that applies to your asset.
For example:
- MACRS 27.5-year is generally used for residential rental property.
- Other assets may require different MACRS methods depending on the asset type and recovery period.
Review IRS Publication 946 if you're unsure which method applies.
Useful Life
Enter the number of years you expect to use the asset in your business or rental activity. The recovery period may be determined by IRS rules, depending on the property type.
Mid-Quarter Property
Select this option if the asset was placed in service during the last three months of the tax year and is subject to the mid-quarter convention rules.
Additional Information
For detailed depreciation rules, asset classifications, recovery periods, and depreciation methods, see IRS Publication 946, How To Depreciate Property.