IRS Form 4562 | Depreciation and Amortization

Form 4562 is a two-page long IRS form used to claim deductions for the depreciation or amortization of business property. It is most often used with claims regarding motor vehicles. It can also be used with other tangible properties as buildings and with intangible properties such as copyrights. A separate Form 4562 must be filed for each property for which depreciation or amortization is being claimed.

How to Fill-in

Part I of Form 4562 must be used in conjunction with Section 179 of the tax code. If you have any Listed Property, you must fill out Part V of this form before you complete Part I. Listed Property, also known as mixed-use property, is a term most often used to describe motor vehicles that the business owns that is used partially for business and partially for pleasure. Line 1, which is the maximum amount, can be gleaned from the worksheet on page 4 of Section 179 for your filing year.

In Part II is for the Special Depreciation Allowance that is allowed for specifically designated types of property, such as cellulosic biofuel plant property. You may be able to take an additional 50% in those properties.

Part III of the Form 4562 is specifically for use with the Modified Accelerated Cost Recovery System (MACRS). This method can’t be used for Listed Property. In Section 179, you will find an extensive discussion on how to calculate the depreciation of many different types of non-listed tangible property.

Part IV is the summary section of Form 4562. Here you will total the amounts determined for listed property and from Parts II and Part III. You must first complete Part V on page 2 before you can complete Part IV. Part IV is found on the last section page 1 of the form.

Part V is for Listed Property. Section A is for the actual depreciation information for all types of mixed mixed-use property. Section C consists of question regarding the provision of automobiles provided by employers for their employees. The answers you provide in Section C may prove to make it unnecessary to fill in Section B, which evaluates information on the actual use of the vehicles.

Part 6 of the Form 4562 is for recording amortization of capital costs. There is a note in the form specifically stating that any part of a property that you amortize is not qualified for Section 179 expense deduction or for depreciation.

It is a good idea to visit Line 43 of Part 6 before you begin filling out Form 4562. It specifies that, if you are reporting amortization costs for properties of a specified age, and you have no other reason to fill out this form, it is unnecessary to do so at all. The amortization can be directly reported on the “Other Deductions” or the “Other Expenses” line on you tax return.