best way to enter depreciation history?

[219487]

This is my first time using TurboTax after 20+ years of using CPA. I have rental property depreciations from prior years - 2003, 2008, 2013, etc. What data do I need to enter these into TurboTax? I have copies of my tax returns including 4562 forms only since 2006. Will this be sufficient or will I need more data from my CPA? How and where do I enter these data in TurboTax?

[AnnetteB6 · Accepted solution]

You will probably need a Depreciation Schedule in order to enter the depreciation as it has been claimed through the years and match the methods, etc.  It is a form similar to a spreadsheet that will show the asset, date placed in service, depreciation method, class life, previous depreciation taken, basis for depreciation and percent of business use.  Those are all the details needed to duplicate the entries from your past returns.

Here is a guide for how to go about entering it into TurboTax in order to duplicate the entries that have been made by the CPA and continue the same depreciation.

• Starting from the Rental Properties and Royalties selection under income, choose Update or Review to get to the details about your rental.
• Proceed to the Rental and Royalty Summary page, then Edit your rental property.
• Proceed through the questions until you reach the Review Your ___ Rental Summary page, then Start or Update the Assets/Depreciation section.
• Proceed to the point where you adding an asset on the page titled Describe This Asset.
• In order to enter the asset exactly as it has been reported in the past, choose the last option on the list, Intangibles, Other Property, then click Continue.
• On the next page titled, Tell Us a Little More, select Other asset type, then click Continue.
• Enter the detailed information about the asset:  description, cost, date purchased or acquired.  Click Continue.
• Continue with additional details on the next screen, then click Continue.
• Select the appropriate Asset Class, then click Continue.
• Choose the MACRS Convention, then click Continue.
• Select the Depreciation Method, then click Continue.
• Answer the question regarding Listed Property, then click Continue.  There may be some additional background questions as well, keep going.
• You will eventually come to a screen to confirm the Prior Depreciation, enter the data and click Continue.
• Finally, you will see an Asset Summary screen with the current year depreciation amount listed.  There is also a check-box here to Show Details.  This will open a full description for the asset so you can verify that it matches the previously reported information.  If it does not, you can choose to go Back and re-enter the data that needs to be changed. 

[JulianF]

2 questions:

1. It does not let me enter an asset start date that is prior to the business start date

2. How do I enter an asset depreciation history into TurboTax business 2019?

[DeanM15]

You can not depreciate an asset before you started using it for business. So the asset start date cannot be prior to the business start date.

No matter which program you are using, or what asset you are entering, there will be a screen that asks you for prior depreciation or depreciation history. You will need to enter the asset into TurboTax and answer the questions on the screens that follow with care. In both the  Rental section and Self Employment section of Turbotax, you will get a screen that asks you to Confirm your prior depreciation. The amount that is in the box is based on the questions that you answered before. 

@JulianF

[Carl]

You will need two forms from your 2018 tax return only. Both forms are IRS Form 4562 and they both print in landscape format. One is titled "Depreciation and Amortization Report" and the other is "Alternative Minimum Tax Depreciation". The most important one is the first one I mentioned.

When entering your data into TurboTax 2019 make sure you list the assets "EXACTLY" as they are printed on the 4562.  But here's some clarification you will need for a bit of manual math you will have to perform on your own. for each asset listed.

COST - on the 2018 form 4562 add together the amounts in the "Cost (net of land)" and the "LAND" column for the specific asset being entered into Turbotax. Enter that total in the COST box.

COST OF LAND - Enter the amount shown in the LAND column of the 2018 from 4562.

PRIOR DEPRECIATION ALREADY TAKEN - The program will do it's best to calculate the correct amount, and it's usually within a few bucks of being correct. If so, then leave it alone. Otherwise, if it's off, you need to enter the correct amount of prior year's depreciation taken. To get that correct amount look at the 2018 form 4562 and add together the amounts in the "prior years depr" column and the "current year depr" column. Enter that total in the program in the "Prior years deprecation already taken" box.

WHen you get to the REVIEW screen, which is the last screen for the asset being entered, click the "show details" button and things should be pretty close, if not spot on with the 2018 form 4562. Any dollar amount off by more than $5 "could" be a problem, and if that is your case I'll help you address it - or help determine if it's fine and you just leave well enough alone.

On another note, if your 4562 shows a section for "amortized costs" with data in it, that gets handled a completely different way. But lets deal with that after you get all the depreciable assets entered. Then I'll help you deal with the amortized assets.

YOu will have more questions, and I know it. But instead of bombarding you with all that data now and risking "information overload" on your end, I've got the data ready for you and will post when you realize you need it, and ask for it. So when questions arise, just post back and ask. I'm more than happy to help a fellow landlord - especially when they're new to this game. 🙂