Investors & landlords

Form 3115 will need to be filed with your return. You will need to use TTD to file the form with your return. If you choose to file the form 3115 separately, there is a fee. You will need to make adjustments to your tax return for the missed depreciation.

You will have to compensate for the missed depreciation by adding it as a misc expense, sec 481a- missed depreciation and then add it back as rental income. If it is less than $50,000, you can take it all on this year. Otherwise, it is spread over a 4 year period.

In addition, you will receive more mail to allow the IRS to open or keep open all affected periods due to the 3115 change. You may have to pay a late fee since you did not file the first year after missed depreciation.

Our live agents can do this for you if you want to switch to letting us prepare your return. I would strongly recommend it for this situation. Otherwise, see About Form 3115, Application for Change in Accounting 

Subtracting depreciation

Adding adjustment

Claiming the income if $50,000 or less