TurboTax / Tax Calculators & Tips / All Tax Guides / IRS Tax Forms / What Is the IRS Form 4562?

What Is the IRS Form 4562?

Updated for Tax Year 2016


OVERVIEW

If you've purchased property to use in your business, you can deduct a portion of your costs by claiming a depreciation deduction and reporting it on IRS Form 4562.


When you purchase property to use in your business, the IRS doesn’t allow you to claim the full cost as a business deduction in the first year. However, you can deduct a portion of your costs each year by claiming a depreciation deduction and reporting it on IRS Form 4562, Depreciation and Amortization. The amount you can deduct on Form 4562 will vary depending on the IRS estimated useful life for each piece of property.

What is depreciation?

You can think of depreciation as the process of gradually writing off the annual wear and tear of each piece of property. The IRS estimates the number of years that certain types of property will be useful to you by establishing different property classes. Each class dictates how many years you must claim a depreciation deduction before you can recover the full cost of the property. For example, if you own a business vehicle, the IRS requires you to treat it as “5-year property” which allows you to claim five annual depreciation deductions for the vehicle.

Property you can depreciate

Generally, you can depreciate most business equipment and property that has a useful life of more than one year and that you actually use for more than one year. Although not an exclusive list, this includes buildings, furniture, machinery and even some patents and copyrights. You cannot depreciate property you use for personal purposes or any land that you own, even if used solely for business.

Accelerating your deductions

The Internal Revenue Code encourages businesses to make capital investments by allowing you to deduct the full cost of some depreciable property in one tax year if you make a Section 179 election. Generally, the IRS places an annual limit on the amount of purchases eligible for this accelerated deduction. For example, in 2016 you can elect to deduct up to $500,000 of costs. If you purchase more than this, the excess is subject to the normal depreciation deduction rules. You can make the Section 179 election right on Form 4562.

Filing Form 4562

File Form 4562 with your individual or business tax return for any year you are claiming a depreciation deduction or making a Section 179 election. When you claim depreciation, it’s incredibly important that you retain copies of all 4562's so you can track your prior deductions and claim the appropriate amount in future years.

When you use TurboTax to do your taxes, we’ll ask questions about your business and help you determine which assets you can depreciate, and how much you can deduct for each. We’ll also fill in all the right forms for you. Better still, when you use TurboTax every year, we’ll keep track of all the assets you’ve already been depreciating, so you can accurately track and report multi-year depreciation.

Perfect for independent contractors
and businesses

Find more tax deductions so you can keep more of the money you earn with TurboTax Self-Employed.

For only $114.99$89.99*
Start for Free

Looking for more information?

The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business.


Security is built into everything we do
Here's how
* Important Offer Details and Disclosures
  • TURBOTAX ONLINE/MOBILE

  • Try for Free/Pay When You File: TurboTax online and mobile pricing is based on your tax situation and varies by product. Free 1040EZ/1040A + Free State offer only available with TurboTax Federal Free Edition; Offer may change or end at any time without notice. Actual prices are determined at the time of print or e-file and are subject to change without notice. Savings and price comparisons based on anticipated price increase expected in March. Special discount offers may not be valid for mobile in-app purchases.
  • QuickBooks Bonus Offer with TurboTax Self-Employed: File your 2016 federal return with TurboTax Self-Employed by 4/18/17 and receive a complimentary subscription to QuickBooks Self-Employed until 4/30/18 at no additional cost. After you file your taxes, you must activate your QuickBooks Self-Employed subscription by 7/15/2017 by logging into QuickBooks Self-Employed via mobile app or at https://selfemployed.intuit.com/login. Once activated, you will have access to QuickBooks Self-Employed until 4/30/2018.
    Offer valid only for new QuickBooks Self-Employed customers.
    • When you use TurboTax Self-Employed to file your 2017 taxes, you will have the option to renew your QuickBooks Self-Employed subscription. If you do not file with TurboTax Self-Employed by 4/30/2018, your QuickBooks Self-Employed subscription will automatically renew on 5/1/2018 for another year at the then-current annual subscription rate. You may cancel your subscription at any time from within the QuickBooks Self-Employed billing section.
  • Pays for itself: In order to pay for the price of TurboTax Self-Employed, you will need at least $600 in deductible business expenses. This calculation is based on the self-employment tax income rate for tax year 2016.
  • Anytime, anywhere: Internet access required; standard message and data rates apply to download and use mobile app.
  • Fastest refund possible: Fastest tax refund with e-file and direct deposit; tax refund time frames will vary.
  • Pay for TurboTax out of your federal refund: $X.XX Refund Processing Service fee applies to this payment method. Prices are subject to change without notice.
  • TurboTax Expert Help, Tax Advice and SmartLook: Included with Deluxe, Premier and Self-Employed (via phone or SmartLook); not included with Federal Free Edition. Feature availability varies by device. State tax advice is free. Service, experience levels, hours of operation and availability vary, and are subject to restriction and change without notice.
  • #1 best-selling tax software: Based on aggregated sales data for all tax year 2015 TurboTax products.
  • Most Popular: TurboTax Deluxe is our most popular product among TurboTax Online users with more complex tax situations.
  • CompleteCheck: Covered under the TurboTax accurate calculations and maximum refund guarantees.
  • TurboTax Self-Employed Expense Finder: Available only in TurboTax Self-Employed. Not available for people with certain types of expenses and tax situations including paying contractors or employees, home office or vehicle actuals, inventory, self employed health insurance or retirement, asset depreciation, sale of property or vehicles, and farm income. Some financial institutions limit the timeframe for which historical transactions may be imported by ExpenseFinder. ExpenseFinder expected late January (late February for mobile app).
  • TURBOTAX CD/DOWNLOAD SOFTWARE

  • TurboTax CD/Download products: Price includes tax preparation and printing of federal tax returns and free federal e-file of up to 5 federal tax returns. Additional fees apply for e-filing state returns. E-file fees do not apply to New York state returns. Savings and price comparison based on anticipated price increase expected in March. Prices subject to change without notice.
  • Fastest refund possible: Fastest tax refund with e-file and direct deposit; tax refund time frames will vary.
  • Pay for TurboTax out of your federal refund: $X.XX Refund Processing Service fee applies to this payment method. Prices are subject to change without notice. This benefit is available with TurboTax Federal products except TurboTax Business.
  • About our TurboTax Product Experts: Customer service and product support vary by time of year.
  • About our credentialed tax experts: Live tax advice via phone is included with Premier and Home & Business; fees apply for Basic and Deluxe customers. State tax advice is free. Service, experience levels, hours of operation and availability vary, and are subject to restriction and change without notice. Not available for TurboTax Business customers.
  • #1 best-selling tax software: Based on aggregated sales data for all tax year 2015 TurboTax products.
  • Data Import: Imports financial data from participating companies. Quicken and QuickBooks import not available with TurboTax installed on a Mac. Imports from Quicken (2015 and higher) and QuickBooks Desktop (2011 and higher); both Windows only. Quicken import not available for TurboTax Business. Quicken products provided by Quicken Inc., Quicken import subject to change.