IRS Form 4562 Instructions
Fill out and submit IRS 4562 if you request:
- Depreciation for the property you started to use for your business during the tax year;
- Depreciation on any corporate income tax return except for IRS Form 1120S, U.S. Income Tax Return for an S Corporation;
- Amortization of costs that began during the tax year for which you complete your tax return;
- Section 179 expense deductions;
- Depreciation of motor vehicle or other listed property;
- Deductions for any vehicle except for reported on Schedule C-EZ (Form 1040), Net Profit from Business or Schedule C (Form 1040), Profit or Loss from Business.
You should not fill out this form if you are an employee and wish to deduct job-related vehicle expenses. Use either Form 2106, Employee Business Expenses or Form 2106-EZ, Unreimbursed Employee Business Expenses instead.
Depreciation is the deduction that allows you to recover the costs of your business or other property over a few years. You can depreciate both tangible and intangible property. Tangible property usually includes buildings, vehicles, machinery, furniture, and others. This is one of the ways to claim a tax deduction as a homeowner (for homeowners that rent out their property). Intangible property includes computer software, patents, and copyrights.
Complete a separate IRS 4562 for each business or activity you indicate on your tax return. If you need more space to provide full information, attach additional sheets. However, you can file only one Part I in total. That is why if you have more than one business or activity, allocate your section 179 expense deductions among them. More detailed explanations and definitions are provided in the official Instructions for Form 4562 issued by the IRS. Additional step-by-step completion instructions are provided below.
How to Fill out IRS Form 4562?
- Enter your name as it appears on your tax return form, specific business or activity you claim depreciation and amortization for, and identifying number at the top part of the page;
- Part I. Election to Expense Certain Property under Section 179. Claim section 179 deductions on computer software you use for your business and some kinds of tangible property in this part. It will allow you to deduct the full price you paid for a specific property at once instead of lowering it gradually year by year via depreciation. The maximum amount you can deduct is $1,000,000. Use the worksheet provided in the IRS-issued instructions to calculate your amount. Remember that estates and trusts are not allowed to complete this part;
- Part II. Special Depreciation Allowance and Other Depreciation. Claim extra deductions in this part. You can claim deductions only for the first year you use an item for your business purpose in this part;
- Part III. MACRS Depreciation. The Modified Accelerated Cost Recovery System (MACRS) can be applied for depreciation of any tangible property you have used for your business since 1986, excluding videotapes, sound recordings, and films. The MACRS includes both General Depreciation System and Alternative Depreciation System;
- Part IV. Summary. This part is self-explanatory. It requires information from other parts. That is why you have to complete Part V first;
- Part V. Listed Property. Fill out this part to claim deductions for listed property, including certain types of vehicles, aircraft, as well as property used for recreation and entertainment (e.g., photographic and video recording equipment);
- Part VI. Amortization. Complete this part if you elect amortization. You cannot select section 179 expense deduction or depreciation for the part of the property you amortize.
File the IRS depreciation and amortization form attached to your tax return documents.