I have rental property for almost 4 years and I've been doing my taxes through Turbo tax, but I never put the property depreciation into account to lower my tax.

[sameh83kh]

I already filed my tax this year too, what can I do? can I do some sort of amendment to this year and previous years to claim some of my taxes back? Please help!

[Carl]

The program may have been doing this "for you" like it's suposed to, and you may not even know it. Elect to edit the rental property and go into the Assets/Depreciation section. do you have anything listed there? At a minimum, you should have the property itself listed.

[leeloo]

It's too late for an amendment. You will need to make the correction on Form 3115.

Unfortunately the depreciation recapture is "allowed or allowable" meaning even if you never depreciated it, you would still have to recapture the depreciation. Depreciation taken would be on line 18 of Schedule E.

One solution is to elect an accounting method change and file a Form 3115 in the current year and take the  prior depreciation as a section 481(a) adjustment. [land  value is separated, land is not depreciated]

Below are the IRS links related to the change in accounting method. TurboTax does not have that form.

May be these will help

Form 3115, Application for Change in Accounting Method

http://www.irs.gov/uac/Form-3115,-Application-for-Change-in-Accounting-Method

Instructions for Form 3115 (03/2012) 

http://www.irs.gov/instructions/i3115/index.html

Form 3115,

http://www.irs.gov/file_source/pub/irs-pdf/f3115.pdf

[SharonD007]

Yes, you can prepare an amendment for your 2022 tax return to catch up on all the missing depreciation. Wait until your tax return is processed before you prepare your amendment. You need to complete a Form 3115 - Application for Change in Accounting Method since you have never depreciated your rental real estate. This allows you to make the adjustment on your current year tax return to deduct the missing depreciation. The reason you are adopting a change in your accounting method is because you didn’t claim depreciation for two or more years which indicates that you were using an accounting method without depreciation, so you change your accounting method to include depreciation.

You can only prepare Form 3115 in TurboTax Desktop. Follow the instructions below:

1. Select View from the top toolbar
2. Then select Forms
3. Select Open Form and type 3115
4. Select Form 3115, p1-3: Change in Accounting Method and select Open Form
5. Complete these lines and boxes:
6. Tax year of change: Enter current year
7. Type of applicant: Choose what type of entity you are
8. Type of accounting method change: Select Depreciation or amortization
9. Part I: For question 1(a) DCN: Type in 7
10. Answer questions 2 and 3
11. Part II: Answer questions
12. Part IV, question 25: Select No (to get to Part IV, you might have to select QuickZoom at the bottom of the form)
13. Question 26: Enter the depreciation adjustment amount 
14. Question 27: Answer No
15. Answer question 28
16. Skip to Page 8, Schedule E Change in Depreciation or Amortization and complete the section (you might have to select QuickZoom at the bottom of the form again)

Please review the TurboTax Help article What should I do if I didn’t take depreciation on my rental property? for additional instructions and How to File an Amended Tax Return with the IRS.

[sameh83kh]

Thank you so much Sharon, I sincerely appreciate it! I'll wait till they process this tax year then I'll do it.

[Carl]

To clarify a bit further:

Your situation is covered in IRS Publication 946 at https://www.irs.gov/pub/irs-pdf/p946.pdf starting at the bottom of page 13 and continuing to page 14.

You cannot amend prior year's returns to fix this, because you have not depreciated the property for "2 or more consecutive years".  As @SharonD007 stated, you'll have to include IRS Form 3115 - Change in Accounting Method, with your tax return.  You have two choices. You can wait until your e-filed and accepted 2022 tax return is processed in it's entirety and then amend it to include the 3115. Or you can just wait until next year and include the 3115 with your 2023 tax return.

Now while the TurboTax program does include the 3115, it is not simple by an stretch. I would highly recommend you seek professional help to fix this. Doing it wrong can (and will) make things worse. If your state taxes personal income, that could be a double-whammy. The potential fines, penalties and back taxes from doing things wrong can make the cost of professional help seem like a pittance in comparison. So please seek professional help for this.

When/if you seek professional help, ensure you get a printout of the return from the preparer that includes all worksheets and calculation forms, as you will need it if you wish to continue using TurboTax in the future.

[sameh83kh]

Thank you Carl, I appreciate that info. as you said, if I feel I'm gonna messed it, I'll definitely going to seek professional help.