If you claimed federal special depreciation (bonus depreciation) on Form 4562 or Form 2106, Illinois may require an addition or subtraction adjustment when calculating your Illinois income. The Illinois IL-4562 Special Depreciation screen is used to determine those state-specific depreciation adjustments. Illinois specifically identifies Form IL-4562 depreciation adjustments as an addition reported through Schedule M.
What Is IL-4562 Special Depreciation?
Illinois does not always follow the federal rules for bonus depreciation. Because of this difference, taxpayers who claimed federal special depreciation may need to adjust their Illinois income.
The IL-4562 Special Depreciation screen helps calculate:
- Prior-year Illinois special depreciation additions
- Prior-year Illinois special depreciation subtractions
- The federal depreciation that would have been allowed if bonus depreciation had not been claimed
The information entered is used to calculate any required Illinois Schedule M adjustment.
Who Needs to Complete This Screen?
You may need to complete the IL-4562 Special Depreciation section if:
- You claimed bonus depreciation on a federal Form 4562.
- You claimed depreciation adjustments related to federal Form 2106.
- You filed Illinois Form IL-4562 in a prior year.
- You have depreciation property with Illinois-specific depreciation differences.
If you did not claim federal special depreciation and have no Illinois depreciation adjustments, this screen may not apply to you.
How to Complete the IL-4562 Special Depreciation Screen
Step 1: Locate Your Prior-Year Illinois Forms
Gather copies of:
- Prior-year Illinois Form IL-4562
- Current-year federal Form 4562
- Depreciation schedules prepared for the property
You may need information from multiple years if the asset has been depreciated over several years.
Step 2: Enter Prior-Year Illinois Special Depreciation Subtractions
For the field:
Last Year of Regular Depreciation - Enter the total amount of all IL special depreciation subtractions claimed on prior IL-4562 forms, Step 3, Line 8 for each property
Enter the cumulative Illinois special depreciation subtraction amount previously claimed for the property.
Step 3: Enter Prior-Year Illinois Special Depreciation Additions
For the field:
Last Year of Regular Depreciation - Enter the IL special depreciation addition reported on any prior IL-4562 forms, Step 2, Line 1 plus Line 2
Enter the applicable Illinois special depreciation addition amount reported for the property in prior years.
Step 4: Enter Federal Depreciation Without Bonus Depreciation
For the field:
Amount of federal depreciation you would have claimed if you elected not to claim bonus depreciation on your federal return
Enter the depreciation amount that would have been allowable under regular federal depreciation rules had bonus depreciation not been elected.
Step 5: Review Your Illinois Return
After entering the required amounts:
- Continue through the Illinois interview.
- Review Schedule M.
- Confirm that any depreciation addition or subtraction is reflected correctly on the Illinois return. Illinois identifies Form IL-4562 special depreciation adjustments as Schedule M additions and subtractions when applicable.
Program Path
To access the Illinois Special Depreciation screen:
State Return > Illinois Return > IL-4562 Special Depreciation
Frequently Asked Questions
Why is Illinois asking about depreciation that was already entered federally?
Illinois does not always conform to federal bonus depreciation rules. Additional information is sometimes required to calculate Illinois-specific additions and subtractions.
Where do I find the prior-year amounts?
Review prior Illinois Form IL-4562 filings and any depreciation schedules prepared for the affected assets.
What if I no longer have my prior Illinois Form IL-4562?
You may need to obtain a copy of the return that originally reported the depreciation addition or subtraction before completing this screen.
Can I leave the fields blank?
Only if no Illinois special depreciation adjustments apply. If you previously claimed Illinois depreciation additions or subtractions, leaving the fields blank may result in an incorrect Illinois return.
Helpful Tips
- Keep depreciation schedules for all business and investment assets.
- Retain copies of prior-year Illinois Form IL-4562 filings.
- Verify that prior-year additions and subtractions are entered using the correct Illinois figures, not the federal amounts.
- Compare the completed Illinois return to prior-year depreciation records before filing.
- If multiple properties are involved, review the depreciation records for each asset carefully.
Note
This screen is intended to calculate Illinois depreciation differences. The amounts entered should come from your Illinois depreciation records and supporting schedules. If you are unsure of the correct amounts, review your prior Illinois Form IL-4562 filings and depreciation schedules before completing the return.