The expense itself is a number that is subtracted from income, however you do not enter it as a negative number. It is listed as 'Other or Miscellaneous' expenses on Schedule E. Keep in mind the following information.
The rule is as follows - To file IRS Form 3115 for an automatic accounting method change, you must file in duplicate:
- attach the original, unsigned form to your timely filed federal tax return (including extensions), and
- mail a signed copy to the IRS National Office or Ogden, UT office.
Next, for the prior depreciation you have not used.
- You can use the following form to correct the depreciation for your rental property. Take any amount not previously expensed on prior returns, as an expense on the current year tax return as 'Other Expenses'.
Form 3115 Instruction: By including this with the current year tax return, you can complete everything on the 2024 tax return.
- Adopt a change in accounting method: This option allows you to go back as far as you need. Keep in mind that even if you prepare the form 3115 in TurboTax, you will need to manually include the Section 481(a) adjustment to your return under miscellaneous expense for the prior year or missed amount.
- Why am I adopting a change in accounting method? Not claiming depreciation in two or more years indicates that you've chosen an accounting method without depreciation. In this case, you must now elect to change your accounting method to include depreciation.
- You must use the TurboTax Desktop to complete this form. TurboTax doesn't help you with this form. And your return must be mailed because this form is not supported through e-file.
This must be completed and filed with the return on time.
The depreciation will not link from Form 3115 to your Schedule E. Be sure to get the total accumulated depreciation prior to 2025, and enter that number on your Schedule E under 'Any Miscellaneous Expenses' then use the description F3115 Section 481(a), then add the amount. Your depreciation schedule will maintain the information for each asset for future use.
You can change to TurboTax Desktop if you choose.
Additional options that you may consider:
- While form 3115 is not supported in TT, you can include the adjustment amount in your tax return and still e-file your tax return.
- You would then need to complete form 8453, check the form 3115 box and mail both of these forms to the address on the instructions. If you do this, make sure to send the envelope certified mail.
- Not necessarily advocating this method, for the simple fact that the IRS staff is down about 25% and just not sure of all the logistics given the reduction in staffing.
- If you decide to mail both the return with the form 3115, I also recommend you send this envelope certified mail as well.
@ykant7
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
