I forgot a rental improvement in 2020. Do I need to amend 2020, or can I file with 2021?

[bfollowell]

I thought I had everything together when we filed 2020 taxes, but it wasn't until I was looking back through things, preparing to start our 2021 returns that I realized that I forgotten a $4275 improvement to one of our rental properties in 2020. In the late spring of 2020, we replaced the HVAC/furnace system of our oldest rental to the tune of $4275. That should've been included and would've gone in as a depreciable improvement if I'm not mistaken. We got it with a six or nine month's same as cash deal and actually paid that off in mid-January 2021. Typically, regardless of when we paid it off, I would've included it in the year that the work was done and the loan was taken out. Since I forgot, and actually paid it off in 2021, do I need to amend our 2020 taxes, can I add it to 2021, or is either acceptable?

Thanks.

[Carl]

You need to amend your 2020 return to include the asset. After you complete the amendment, when you start your 2021 tax return make certain that you import from the amended .tax2020 file, and not the original one.

[ColeenD3 · Accepted solution]

It was an asset purchased and placed in service in 2020, so you need to amend that year's return to include it.

[bfollowell]

Thank you both. This is what I was expecting to be the case, but it's nice to have confirmation. I really appreciate the advice and guidance.