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It depends. You can use a method the IRS approves to correct the depreciation and then add the difference to your income.
Amending returns prior to 2022, will not fix the problem since those are closed years. As long as the rental property is in your tax returns correctly now, and since 2021, you can use the Form 3115 to make the correction in this current tax year.
Calculate all of the depreciation you used before 2021, then use the chart below (also in IRS Publication 946) to calculate what it should have been.
Next, for the prior depreciation you have used in excess.
Form 3115 Instruction: By including this with the current year tax return, you can complete everything on the 2024 tax return.
Hi DianeW777, and thank you for your quick reply and expert advise.
You had mentioned a chart I should use but I didn't see a link to a chart. "Calculate all of the depreciation you used before 2021, then use the chart below (also in IRS Publication 946) to calculate what it should have been".
I didn't include the rental property income for years 2021, 2022, 2023 due to I mistakenly make the assumption that because the properties were in Puerto Rico I didn't have to report them in the federal tax. I can go and fix 2022, and 2023 but I'm not sure what to do with 2021. Should I submit the 3115 with the 2022 tax amendment? What happens to 2021?
Thanks!
The 3115 goes with your current year tax return (2024).
I recommend going to a tax professional for this year.
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