prior year depreciation

[bluesjumper]

First year using TurboTax, switched over from Tax Act. I have a couple property rentals. I'm stuck on the question of entering prior year depreciation. TurboTax calculated the amount, but I actually started depreciating (by mistake) some years after I had purchased and was renting the properties.

TurboTax suggested I could find the cumulative prior depreciation on my tax return. Is this Form 4562, MACRS deductions for assets placed in service in prior years? That's the only amount I see. But then where is the current year depreciation expense? I thought it was Schedule E line 18, but why is that amount exactly the same as the MACRS amount for prior years? (I wonder if I've been entering prior year depreciation wrong in Tax Act all these years!)

I am confused. Am I supposed to go back to all my prior tax returns individually and add up these Schedule E depreciation amounts?

[AnnetteB6 · Accepted solution]

To be accurate, you may need to review your prior tax returns to determine the depreciation amounts that have already been claimed.  

Or, there may be a depreciation table (sort of like a spreadsheet format) that is included as a behind-the-scenes worksheet where you can see all of the assets being depreciated, the details of what depreciation is being used, and the prior depreciation claimed.  TurboTax generates this worksheet and it can be printed/viewed for your information but it is not filed as part of your tax return.  I would assume that other tax software programs generate something similar, but I'm not familiar with TaxAct to know for certain.

As for the amount you see on Form 4562, MACRS deductions for assets placed in service in prior years, that is the current-year depreciation deduction for any assets that were placed in service in a prior tax year.  That is not the amount that has been previously claimed in prior tax years.  If you did not place any new assets in service in 2022, then that is your only depreciation deduction for 2022.

[Mike9241]

if you did not start depreciation the first year they became rentals you should see a tax pro to get this straighten out. you can not just dump the extra depreciation into the current year. you would need to file form 3115 which can be complicated. when you sell you must recapture all depreciation that would have been allowed if you had correctly computed the depreciation from the start. if you don't correct this you will be paying taxes on deductions you never took. 

[bluesjumper]

Mike, I just swallowed my mistake of not depreciating some earlier years. Subsequently, I only claimed the depreciation amount for each tax year.