AMT depreciation or regular depreciation

[Newfei]

When I input my rental house income, I found the TurboTax using AMT depreciation instead of regular depreciation (by H&R Block). Do I have a choice to avoid AMT depreciation in the software?

[DavidD66]

No, you don't have a choice.  The program will calculate three types of depreciation:  Regular Tax, AMT, State.  You may have viewed one of the AMT tax forms or one of the AMT depreciation schedules, but there would be one for regular tax as well.  The Alternative Minimum Tax is just a different way of calculating tax that occurs simultaneously in the program.  You usually only see it or forms related to it if you owe AMT.  When you have depreciation, the AMT forms are created as part of the return as the information is carried forward from year to year, but that doesn't mean you will owe AMT.  

[Newfei]

@DavidD66 

Thanks. I asked this question because HRBLOCK always uses regular depreciation by default, so I think there is a choice. It says,

 https://www.hrblock.com/tax-center/irs/tax-responsibilities/rental-property-depreciation-and-amt/#:~... said:

Is residential rental property depreciation subject to the AMT depreciation adjustment?

It depends on the year you placed the property in service. If you placed the property in service after 1998, you don’t have to make an Alternative Minimum Tax (AMT) depreciation adjustment on the home itself. However, AMT depreciation rates may apply if both of these are true:

• You separately depreciate items you used in a residential real estate activity, like:
• Appliances
• Carpet
• Furniture
• You use the 200% declining balance method.”

[Newfei]

@DavidD66

Thanks. My problem is, I never owe any AMT, but the software automatically adds a “AMT Adjustments Preferences” to the “Net_Value/27.5” in the rental depreciation calculation that makes this year’s depreciation not consistent with my previous year’s depreciation. I have no control of this AMT Adjustment although it is called Adjustments Preferences. I think that is a software issue as the IRS does not require this AMT Adjustments for a rental house. I wish to find a way to get around it. 

[philippe6]

Ran into the same issue. @DavidD66 did you found your way around it ?

[DavidD66]

I would like to take a deeper look at this. However, I need a diagnostic file which is a copy of your tax return that has all of your personal information removed. You can send one to us by following the directions below:

TurboTax Online:

1. Sign into your online account.
2. Locate the Tax Tools on the left-hand side of the screen.
3. A drop-down will appear. Select Tools
4. On the pop-up screen, click on “Share my file with agent.”
5. This will generate a message that a diagnostic file gets sanitized and transmitted to us.
6. Please provide the Token Number that was generated in the response.

TurboTax Desktop/Download Versions:

1. Open your return.
2. Click the Online tab in the black bar across the top of TurboTax and select “Send Tax File to Agent” *
3. This will generate a message that a diagnostic copy will be created.  Click on OK and the tax file will be sanitized and transmitted to us.
4. Please provide the Token Number (including the dash) that was generated in the response.

*(If using a MAC, go to the menu at the top of the screen, select Help, then, “Send Tax File to Agent”)

Please take a screen shot of the token and send with your response.  

[Newfei]

My question is simple. By Turbotax, in Form 4562 Alternative Minimum Tax Depreciation, item “Adjustments Preferences” is automatically added, so the Depreciation is much higher. In HR Block, there is no such addition. I have no control to choose if I need to add this item.

[ThomasM125]

The preferences you mention would only apply if you are subject to alternative minimum tax (AMT). They would be used to calculate the depreciation used to calculate your AMT. If you were subject to AMT, then your tax would be calculated under the AMT rules. Being subject to AMT would involve more than a simple depreciation adjustment, so if you do have AMT there would be other entries on your tax return that would effectuate that. Unless your return as stated in TurboTax was the exact same as it was stated using H&R Block, you may not see a reference to AMT in the H&R block return. In either case, it would have no affect on your normal, non-AMT tax.

[Newfei]

Thanks for the reply. I don’t subject to AMT, but the Depreciation=Current Depreciation + Adjustment Preferences was use by Turbo Tax.   

[DianeW777]

The total depreciation used by TurboTax would be the regular deprecation of $9,326. It would not add any adjustment preference unless there was something additional creating it in your tax file. There is no indicator this would be created without manual intervention which may be in error.

As indicated by one of our tax experts, @DavidD66, a diagnostic file would be quite helpful to get to the heart of this experience and help you correct it. 

@Newfei