I forgot a rental improvement in 2020. Do I need to amend 2020, or can I file with 2021?

[bfollowell]

I thought I had everything together when we filed 2020 taxes, but it wasn't until I was looking back through things, preparing to start our 2021 returns that I realized that I forgotten a $4275 improvement to one of our rental properties in 2020. In the late spring of 2020, we replaced the HVAC/furnace system of our oldest rental to the tune of $4275. That should've been included and would've gone in a depreciable improvement if I'm not mistaken. We got it with a six or nine month's same as cash deal and actually paid that off in mid-January 2021. Typically, regardless of when we paid it off, I would've included it in the year that the work was done and the loan was taken out. Since I forgot, and actually paid it off in 2021, do I need to amend our 2020 taxes, can I add it to 2021, or is either acceptable?

Thanks.

[Cynthiad66]

Yes you should amend 2020.  You can file an amended return using TurboTax for free.  Use this link for infoormation on how to file an amended return.  How to File an Amended Return

If you decide to amend your 2020 tax return, you may be able to deduct the total cost of the HVAC using Bonus Depreciation. Bonus depreciation applies only to personal property (not the building) with a useful life of less than 20 years. . However, if you prefer to not amend you can depreciate the asset over a 10 year period and claim the allowable depreciation for the second year on your 2021 tax return..