Hi Community, In previous years I used the INCORRECT type of ASSET and incorrect DEPRECIATION method for a mobile home. How can I fix this error? Please help!

[DavidD66]

In order to make adjustments to your prior years' depreciation, you have two options:

1. File amended returns.  Of course this is cumbersome, as you have to file a Form 1040X for each year.  Moreover, to claim a refund, you must file Form 1040-X within 3 years after the date you filed your original return or within 2 years after the date you paid the tax, whichever is later. 
2. File a Form 3115 - Application for Change in Accounting Method.  This will allow you to calculate the correct amount of depreciation for all prior year's, and make a single adjustment on your 2019 tax return.  Form 3115 is available in TurboTax Desktop, but not Online.  You might want to consult a local tax professional about filing form 3115.

[Ara441]

Hi,

Thanks for your reply.

So, once I have completed the 3115 form.

1. How to make the corresponding adjustments in TT?
2. How to eliminate the asset that is already in TT using the incorrect depreciation method?
3. Must I create a new asset in TT using the correct depreciation method to calculate the proper depreciation?
4. If the depreciation adjustment is positive, must I add it to income on my tax return?

I will appreciate your help so much.

[ara44]

Hi,

Thanks for your reply.

So, once I have completed the 3115 form.

1. How to make the corresponding adjustments in TT?
2. How to eliminate the asset that is already in TT using the incorrect depreciation method?
3. Must I create a new asset in TT using the correct depreciation method to calculate the proper depreciation?
4. If the depreciation adjustment is positive, must I add it to income on my tax return?

I will appreciate your help so much.

[ThomasM125 · Accepted solution]

You enter the adjustment as an "other expense" on the business schedule to which it pertains.

To  delete the asset, you edit the business entry where the asset was entered, and look for "Business Assets" in the list of expenses and edit the menu choice "Assets being Depreciated." You will see a list of the assets for that business, with an option next to them to delete the asset.

You do need to enter a new asset. Input the cost, date purchased, date put into service and other questions asked. Select the proper asset type and TurboTax will calculate the correct accumulated depreciation.

You would have to add the adjustment if positive. To do so, add an "other" expense as a negative number.

[ara44]

ThomasM125 thank you so much for your help on this matter. I am now clear on how to make the adjustment.

However, I still have the following questions:

1) I know that I need to switch from TTO to TTD. Will TTD allow me to E-file?

2) Can I just use TTO and send my Income Tax Return by regular mail including a copy of the 1135 Form?

3) Which process do you recommend to follow?

 Thanks,

[RobertG]

1) TurboTax will not let you e-file a Form 3115 in the download version.

2) You can just print your return and include a copy of the form.

3) Either way will work. I would recommend using the download version so it is included in your tax file.

If you started your 2019 return in TurboTax Online and want to switch to the TurboTax software, here's how.

1. Save your online return as a tax data file.
2. Sign out of TurboTax Online.
3. Install your 2019 TurboTax software.
   • If you have not purchased TurboTax Desktop software, select the product you need to complete your return.
   • Important: If your return includes a state, make sure you also install the corresponding state program(s), otherwise you'll get Error 539.
4. Once installed, choose File then Open Tax Return in the software.
5. Browse to where you saved your .tax2019 file, select it, and then select Open.
6. If you get an error, delete your tax data file and repeat these steps from the beginning.
7. Optional: Once you've confirmed that your online return opens properly in the software, you can clear your online return.

[ara44]

Hi ThomasM125

In your reply to my question, you told me that (red:(

 "You do need to enter a new asset. Input the cost, date purchased, date put into service and other questions asked. Select the proper asset type and TurboTax will calculate the correct accumulated depreciation."

BUT, when I enter the new asset in TT it looks like TT is not calculating accumulated depreciation for 2017-2018-2019 but only for 2019. What am I doing wrong?

I will appreciate your help so much.

[JamesG1]

When you entered the date purchased, did you use the correct 2017 date of purchase and 2017 date put into service?

And not 2019 dates?

[ara44]

Yes, I entered the correct 2017 date of purchase and 2017 date put into service? NOT 2019.

[ara44]

Yes, I entered the correct 2017 date of purchase and 2017 date put into service? NOT 2019.