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.
- You can use the following form to correct the depreciation for your rental property. Take any amount expensed in excess of the amount allowed on prior returns, as income on the current year tax return as 'Other Income'.
Form 3115 Instruction: By including this with the current year tax return, you can complete everything on the 2024 tax return.
- Adopt a change in accounting method: This option allows you to go back as far as you need. Make the adjustment on your current year tax return to expense the missing depreciation.
- Why am I adopting a change in accounting method? Claiming excess depreciation in two or more years indicates that you've chosen an accounting method with the wrong depreciation chart. In this case, you must now elect to change your accounting method to correct the depreciation.
- This form is available in both TurboTax Online and TurboTax Desktop. TurboTax doesn't help you with this form. And your return must be mailed because this form is not supported through e-file.
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