I took a 179 expense deduction for a washing machine on my rental property in 2020. It was disallowed even though my business had sufficient positive income and the amount was below the limit. Same thing is happening this year? How can I get Turbo Tax to allow for the deduction? Can I edit the 4562 form directly? The problem seems to be that line 26 is empty, which means total elected cost shows up as zero.
You are not getting a deduction because you can't take Section 179 for rental property, except for qualified improvement property. You can take bonus depreciation.
To qualify for the section 179 deduction, your property must have been acquired for use in your trade or business.
Property you acquire only for the production of income, such as investment property, rental property (if renting property is not your trade or business), and property that produces royalties, does not qualify.
It is on the same page that you would elect Section 179. The screen reads,
"How Do You Want to Deduct this Item?" Note, that although the Section 179 option is there, it only relates to qualified improvement property.
Thank you for that information. I appreciate all of your replies. They are always accurate and don't have a ton of reading links. You just answer the question and don't make people read a lot of boring pages to try to find the answer in the link.
Colleen, I agree. Your answer was super helpful (after much confused reading on my part). THANK YOU! Would you recommend I go back and change the depreciation method (file an amended return for 2020)? Or is there another way to rectify the error in this year's tax return?
Turbo tax is so confusing b/c the software suggests this is a viable deduction for a rental property in the easy step guide. If it's not allowed, it shouldn't be offered - or the language should be simplified so its clear which types of rental properties can take this.
Yes, you can go back and take the depreciation you were entitled to by amending your return. You can't add anything to the 2021 return if it did not take place in 2021.
Amending a 2020, 2019, or 2018 state return is very similar to amending a prior-year federal return. Here are some tips:
This computer was bought for my rental property which is my business. How can I adjust this so that I can finish my taxes? This is my only hang up.