What is Special Depr Allowance (Sch C-Car and Truck Expense) and where do I find it?

[barbarae]

I cannot continue without entering something here but I don't know what it is or where to find it.

[JamesG1]

Under current tax law, the special depreciation allowance may allow you to deduct 100% of the basis of an asset in the current year.

The special depreciation allowance can be found at the screen How much do you want to deduct for the business use of this vehicle?  At the bottom of the screen, you may select I'll take the special depreciation allowance.

In TurboTax Online Self-Employed, follow these directions to find this page.

• Down the left side, click Federal.
• Click on Income & expenses.
• Under Your income and expenses, click on Edit/Add to the right of Self-employment income.
• Click on Edit next to the business name.
• To the right of the vehicle expenses, click Edit.
• Under Vehicle Summary, click Edit to edit the entries.  Click Delete to delete the entries.
• Continue through the pages.
• At the screen Based on the miles you drove, your standard mileage deduction is, click on I'll enter my actual expenses.
• Continue through the pages to the screen How much do you want to deduct for the business use of this vehicle?  At the bottom of the screen, you may select I'll take the special depreciation allowance.

[barbarae]

Thanks for your reply but I don't see "federal" or "income & expenses" anywhere on the screen. What I see on the left is Turbo Tax, Tax Home, Documents, on top, and on the bottom, Intuit Account, sign out. How do I get to the page where I can find "Federal," so I can then follow your instructions?

[JamesG1]

If you click Tax Home on the left, does the tax return that you have been working on appear?

[barbarae]

Yes I found it. I went thru the instructions for Vehicle Summary to the page Ka-ching. I went thru it twice and nowhere on the screen did I find How much do you want to deduct for the business use of this vehicle? nor at the bottom I'll take the special depreciation allowance. Please help. I am being told I have to enter something here. 

[JamesG1]

At the screen You've got a standard mileage deduction, did you choose Yes, I'd like to see if my actual expenses give me a bigger deduction?

This will trigger the questions asking about computing depreciation.

Does your self-employment activity show a loss before entering vehicle expenses?  Perhaps you do not qualify for the other varieties of depreciation because you are in a loss status.   This TurboTax Help states:

Your Section 179 deduction amount can't exceed your net business income for the year.

[ninjaryder1st]

Thank you for the instructions on locating this in the software.

I'm tempted to indicate I do not want to take this special allowance given the future implications and need to pay portions of depreciation back should the vehicle asset be sold or no longer used in business/Schedule C reporting.   

Can anyone actually explain what this special allowance is, and how its calculated (and any risk of having to adjust future years for the sale of a vehicle by taking this up front), or link to an IRS publication ?  

 Thanks!

[PatriciaV]

Yes, Special Depreciation (also known as Bonus Depreciation) is available for qualifying property that is new, the original use begins with the taxpayer and falls under MACRS with a recovery period of less than 20 years. 

Residential Real Property is not eligible for Special Depreciation. This includes the building and any improvements.

However, appliances, furnishings, and equipment used in a Rental Property are eligible for Special Depreciation in the year they were purchased and placed into service.

TurboTax makes this determination based on your choice under "Describe this Asset".

For tax year 2024, the rules for Special Depreciation (Bonus Depreciation) allow a 60% deduction of the balance remaining after claiming Section 179. This is available in the year the asset is placed in service and includes rental assets other than the building and improvements. Special Depreciation is the default method for qualifying property unless you opt-out.

See also: IRS Pub 946: Special (Bonus) Depreciation

@ninjaryder1st