Form 4562: Depreciation and Amortization
Overview
Form 4562 is an IRS form used to claim deductions for depreciation and amortization of business property and to report business use of certain listed property (including vehicles). It documents annual deductions for the decline in value of tangible assets (like equipment and buildings) and amortization of intangible assets (like patents).
What the form covers
- Depreciation of tangible property placed in service during the tax year (including MACRS calculations and special depreciation allowances).
- Section 179 election to expense certain qualifying property in the year it is placed in service.
- Amortization of intangible costs that begin during the tax year.
- Reporting of listed property (including vehicles) and business-use percentages for those items.
Who must file
You must file Form 4562 if you are claiming any of the following for a business or activity:
* Depreciation for property placed in service during the tax year.
A Section 179 expense deduction (including any carryover from prior years).
Depreciation on a vehicle or other listed property (regardless of when it was placed in service).
* Amortization that begins during the tax year.
If you operate multiple businesses or activities, file a separate Form 4562 for each one that requires it.
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Important exclusions and rules
- Land is not depreciable and should not be reported on Form 4562.
- Section 179 does not apply to property primarily held for investment, for use outside the U.S., or certain other excluded property.
- Employees may not use Form 4562 to claim unreimbursed job-related vehicle expenses; those deductions were largely suspended by the Tax Cuts and Jobs Act.
- The IRS does not require detailed depreciation schedules to be filed with Form 4562, but you must keep records to support your calculations.
How to complete the form (overview of parts)
Include taxpayer name, taxpayer identification number, and the business activity. Key parts of the form are:
- Part I — Section 179 Election
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Elect to expense qualifying property and compute your Section 179 deduction (complete only once per form).
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Part II — Special Depreciation Allowance and Other Depreciation
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Claim bonus (special) depreciation and other depreciation amounts. Do not include listed property here.
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Part III — MACRS Depreciation
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Compute depreciation under the Modified Accelerated Cost Recovery System (MACRS). Assign assets to the appropriate asset classes and recovery periods.
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Parts for Listed Property and Amortization
- Report business use percentages and other required details for listed property (including vehicles).
- Compute amortization deductions for intangible costs.
Filing tips and recordkeeping
- File the completed Form 4562 with your income tax return for the year the property is placed in service or the year the amortization begins.
- If you need more space, attach additional sheets with the same format and information.
- Maintain depreciation schedules, purchase invoices, and supporting records to substantiate deductions and business-use percentages.
- If claiming Section 179 across multiple activities, ensure proper allocation and compute any carryover correctly.
Key takeaways
- Form 4562 is required to claim depreciation, amortization, Section 179 deductions, and to report listed property used in a business.
- Land cannot be depreciated.
- Separate Forms 4562 are generally required for separate businesses or activities.
- Keep complete records to support your depreciation and amortization calculations.