Startup expenses can only be claimed in the first year the business is "open for business", and is limited to those expenses that were incurred before the business was officially open. So startup expenses is just flat out not the correct place to put this, "UNLESS" these are expenses that were incurred *BEFORE* your business opened. IN such a case, I am assuming several things here.
1) The business opened in 2018.
2) The accountant listed them as startup expenses on your 2018 *AND* 2019 tax return.
3) This asset is listed under the heading of "amortization" (or something similar) on the 4562 titled "Depreciation and Amortization Report" form that prints in landscape format.
4) You are now attempting to do these business taxes yourself, starting with the 2020 tax return.
So lets assume my assumptions are correct from here on out.
- Elect to start/update the Business Assets section. If you need help getting to that section, then what tax return are you filing? 1065, 1120 or 1120-S?
- Click the "Add an Asset" button.
- Select Intangibles/Other Property and continue.
- Select Other Asset Type and continue.
- For description you can enter startup costs (assuming that's what we're dealing with here and they were incurred before your business was officially open.)
- Enter your cost, and the date you acquired/paid for it. This date must match or be *before* the date on the 2019 (twenty ninteen) 4562 for this item. Then continue.
- Select "purchased new" and select "used 100% for business" .
- Enter the date your business opened. This "must" match the in-service date on the 2019 form 4562. Then continue.
- For the asset class, it's 15 years for startup cost, then click continue.
- Now look at the 2019 form 4562 in the method/convention column for that specific item. If you see "MQ" to the right side of the slash, you used mid-quarter convention. If you see "HY" to the right of the slash you used the half year convention. Select as appropriate in TT Business 2020 and continue.
- Depreciation method is straight line, then continue.
- Here you see the recovery period is 15 years. Click Continue.
- More than likely your startup costs are not listed property. So click NO.
If you took a SEC 179 deduction you'll see that under the Section 179 column for that specific item. If applicable enter the amount. Otherwise, leave this blank. Click continue.
- Now you see the "Amount of depreciation taken in prior years". Pay attention here, or you "WILL" get this wrong.
Look on your 2019 (twenty ninteen) form 4562 on the line for this specific item. Add together the amounts in the "Prior Depreciation" column and the "Current Depreciation" column. You will enter that total in TT Business 2020 on the screen you are seeing at this point. Enter that total and continue.
This puts you on the summary screen where you can review the details. If all looks good, click continue and you're done.
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