Question about deductions & depreciation?

[aflashintimephotography]

I've bought a lot of new equipment in 2024. Do I write it off as a business expense AND a depreciation write off as well? Or one or the other? I'm new to this and have one day to file and am stressing out. Thank you. 

[Vanessa A]

No.  If you purchased equipment, you list it as a business asset.  Then the asset will be depreciated.  Depending on the type of asset, you may be able to take full depreciation in the first year, or you may have to depreciate it over several years.

When you take depreciation, you are getting  a deduction from your income whether it be all at once or over time, so if you also wrote it off as a business expense, you would be taking a deduction for the same item twice. 

[aflashintimephotography]

Thank you. So the things I purchased last year take it as a deduction not depreciation?

Also. What about equipment I bought previously years? Do I take depreciation for those or no?

[PatriciaV]

If you have been in business for several years and never included your business assets on your tax return, you may need to contact a local tax professional to help you file amended returns for those years. Plus, you'll need help setting up the assets for depreciation. This link may be helpful: Find a TurboTax Verified Tax Professional near you

Also, with the tax filing deadline fast approaching, you may need to file a request for extension of time to file. You can do that for free using our Easy Extension website.

[aflashintimephotography]

I used a professional last year and they never mentioned assets. I'm trying to do them myself this year and I don't really have time to contact a professional because the deadline is tomorrow. What would you suggest I do?

[PatriciaV]

Yes, you can enter all your assets for either your business (Schedule C) or rental property (Schedule E). TurboTax will calculate the total depreciation you should have taken since you first placed each asset into service and the depreciation expense for the current year.

For the assets you purchased in 2024, you may be able to take the Safe Harbor Election that allows you to expense (not depreciate) assets that individually cost $2,500 or less. 

You will also need to file Form 3115 to request a change in accounting method for the missed depreciation on any asset purchased before 2024. Because Form 3115 is not supported by TurboTax Online in the interview, you may wish to switch TurboTax Desktop (where it is available in Forms Mode). Consult the instructions for this form: Instructions for Form 3115.

Regardless of how you decide to proceed, you should file an extension to avoid penalties and interest for failure to file by the deadline.

Additional Information:

• What should I do if I didn’t take depreciation on my rental property?
• How do I handle capital improvements and depreciation for my rental?
• IRS Instructions for Form 3115: Change in Depreciation or Amortization