Last year, we did our solar as a business to get the 80 percent depreciation. This year, I am trying to get it again but do not know how to do it.

[cunninghamsubscriptions]

Do i need to run it as a business again or just take the carry over as the depreciation

[PatriciaV]

If you were unable to claim the full amount of the special "bonus" depreciation last year, TurboTax would have carried the unused portion forward to your current tax return. The carry over deduction should be automatically applied. Look at Form 8582 Passive Activity Loss Limitations.

Note that you can claim special depreciation only once for an asset and only in the year it was placed into service. You should see additional depreciation expense in subsequent years, based on the remaining balance after the special depreciation was applied.

[cunninghamsubscriptions]

Thank you.

I had a follow up

So we had a tax place do it for us last year as the forms were not in for a while on turbo tax and we needed to get it done. I am not sure how they did it but i know they did not use turbo tax.

If this is the case, no need to file Schedule C this year and i have the form that shows me each year how much Credit I get to use. Is the below the carry over I would claim, no need for another section C?

For you additional information, this is how depreciation will be deducted for tax purposes:

20% in the first year 

32% in year two

19.2% in year three

11% in year four

11% in year five 

and the final portion in year six, 5%

[PatriciaV]

If you reported this solar installation on Schedule C last year, you will need to continue to include Schedule C with your tax return until it is fully depreciated. There is no other way to report depreciation except for a business or rental property.

For additional help, see Where do I enter Schedule C?

[cunninghamsubscriptions]

Thank you again,

I appreciate the help.

Hopefully, this will be last message.

So this year, file schedule C again, do i take the second year info and plug that in the schedule C and not do a carry over? Or do i put the original cost and depreciation of the second year in there.

For you additional information, this is how depreciation will be deducted for tax purposes:

20% in the first year 

32% in year two

19.2% in year three

11% in year four

11% in year five 

and the final portion in year six, 5%

Does the second year get carried over or this plugs into schedule C?

Year 2 Depreciation: 9,303.75

[PatriciaV]

Since you didn't use TurboTax last year, you will need to add this as a business asset for Schedule C. You'll need the original purchase price and the accumulated depreciation from your prior year return.

TurboTax will calculate the depreciation expense for the current year. And if you continue to use TurboTax, you won't need to enter this asset again. The depreciation percentages you have listed match the IRS table for 5-year assets, which is what you will tell TurboTax to use (see below).

You'll find Assets for Depreciation under your Business Summary after you set up your self-employment business in TurboTax. Follow the interview and let TurboTax guide you through the entries. You might take note of any blue "learn more" links on the entry pages if you need more information.

Here are the suggested answers to these questions:

1. Because solar installations are not common, you will need to enter this as "Intangibles, Other property" for the asset category and "other asset type."
2. Enter your original purchase price for cost and the date it was placed in service.
3. Show that you purchased this asset and have always used it 100% for business.
4. Enter the same date that you entered before.
5. Choose 5.0 year asset class life, half-year convention, and with 200% declining balance depreciation method.
6. It is not "listed property."
7. You did not take Section 179, so leave that box blank.
8. Enter the amount of depreciation you claimed last year, including special depreciation.
9. If necessary, click the "show details" box so you can confirm your entries are what you expect. You should see the current year depreciation you have calculated.

See also: What is depreciation?

[AmeliesUncle]

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@cunninghamsubscriptions wrote:

Does the second year get carried over or this plugs into schedule C?

Year 2 Depreciation: 9,303.75

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You are claiming this as a business, so you need to continue to file Schedule C as long as you own the solar panels so you can report the GROSS amount of income from the GROSS amount of solar production (NOT the "net" income) each year.

Did the solar cost about $145,371?

You need to know if the prior tax return treated it as a passive activity or as a non-passive activity.  If it was passive, the loss would NOT have offset your non-passive income and would usually be carried forward.