Incorrect depreciation

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My filed 2025 return understated rental income and may have incorrect depreciation. Should I amend both federal and California returns before filing my 2026 taxes? How do I create this amendment?

M-MTax

Level 15

You should amend both your 2025 federal return (Form 1040-X) and your California state return (Form 540X) before filing your 2026 taxes so that your 2026 carryover figures and asset basis start with clean, accurate numbers.

M-MTax

Level 15

If Using TurboTax Online:

Scroll down to Your tax returns & documents and select the 2025 tax year.

Click on Amend (change) 2025 return and choose Amend using TurboTax Online.

Follow the on-screen prompts to update your rental income and fix the depreciation entries under your rental property section.

Continue through the screens when prompted to handle your state return, and select Amend next to California (Form 540X).

Review the figures, sign off, and e-file or print and mail both amended forms as instructed by the software.

If Using TurboTax Desktop:

Open the 2025 TurboTax Desktop software.

Select the option to Amend a return after it was filed and accepted.

Navigate to the rental property section to correct the income and depreciation entries.

Save a copy of the amended file under a distinct new name so you do not overwrite your original 2025 return.

Proceed to the state section to generate and review your amended California return.

Note: If the depreciation error spans multiple prior tax years rather than just a single year, or if you need to formally change an accounting method, you may need to evaluate whether to file Form 3115 instead of a standard amendment

Felix BlancoAuthor

Level 2

Thank you. Since my property was converted from a personal residence to a rental in 2025, should the corrected depreciation basis include qualifying improvements made before conversion? Also, this was the first-year rental, so depreciation correction can be handled through an amended Schedule E, rather than Form 3115?