Cynthiad66
Expert Alumni

Investors & landlords

@1isa

Tax recapture is key because depreciation is allowed or allowable.  The IRS requires that you recapture all allowable depreciation to be taxed (i.e. including the depreciation you did not deduct).

 

The proper way to fix this situation is to include the IRS Form 3115 - Change In Accounting Method form with your 2021 tax filing, to correct the depreciation. While this form is included with the TurboTax program, it's not simple by any stretch.

 

You will have to purchase a desktop version of TurboTax for Form 3115 and, basically, start over with that version.

 

However, even with the desktop versions, Form 3115 generally needs to be prepared in Forms Mode (there is virtually no guidance in terms of making entries). As a result, you might be better advised to seek guidance from a tax professional to prepare this form.

 

You should be able to e-file this form.  Use the search bar after you login to search Form 3115.  Use the link below for instructions for Form 3115.  Instructions Form 3115

 

[Edited 3/1/2022 9:04AM PST]

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