Get a Copy of Your Depreciation Schedule
By Tom Copeland, posted with his permission.
It's a topic that few family child care providers fully understand.
The reason is that depreciation rules are complicated: there's the regular rules, the 50% bonus rule, the Section 179 rule, and the new 2014 $500 safe harbor rule. It's hard to make sense of it all.
If you have your taxes done by a tax professional, he or she will
prepare a depreciation schedule (sometimes called a depreciation
worksheet) that will show all the details of how your depreciation
deductions for the current year were calculated.
These details include:
* The cost of the item
* The date it was first used in your business
* The number of years the item is being depreciated
* The method used (straight line or accelerated), and
* Any special rules that were applied to the item (50% bonus, Section 179, etc.).
Each year, tell you tax professional about any new depreciable items
you purchased, so he or she can add them to your depreciation schedule.
The depreciation schedule is not submitted to the IRS with your tax
forms. It's a tool used by your tax professional to document how your
depreciation deductions were calculated in the current year and how they
will be calculated in subsequent tax years.
Your depreciation schedule is a crucial document for your business.
Therefore, you will want a copy for your own tax records for each year
you file your business tax forms.
If you don't have a copy, you won't be able to tell how the amount of depreciation was determined on IRS Form 4562 Depreciation and Amortization.
Therefore, before paying your tax professional, ask for a copy of
your depreciation schedule. Although your tax professional is not
required by law to give a copy to you, it's the professional thing to
do.
Some tax professionals may say that this schedule is their property
and belongs to them. They may be worried that you want the schedule
because you are planning to use a different tax professional in the
future. Even if this is true, I don't believe that it's a good reason
not to give you what you paid for. If you do use a new tax professional
in the future, he or she will need this schedule to file an accurate tax
return for you.
If your tax professional refuses to give you your depreciation
schedule, explain that you need it so you can see how your depreciation
deductions were calculated.
You will need your depreciation schedule if:
* You ever use a different tax professional
* If your tax professional retires, dies, or loses his or her copy, or
* If you are ever audited.
Lastly, if you do your own taxes in lat
er years, you will not be able
to accurately claim depreciation deductions without this depreciation
schedule.
Before hiring a tax professional, ask if they will provide this
schedule to you along with your completed tax forms. If not, look
elsewhere.
Alison Jacks, an Enrolled Agent in California has written a fine article about depreciation schedules. In it, she posts an excellent sample depreciation schedule that will give you an idea of what you need for your tax files.
Tom Copeland - www.tomcopelandblog.com
Image credit: www.vertex42.com
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If you are
making your income tax with me (Angel Olmedo 7730867-7387 tel, 847-849-1668) you
will receive always a list of yours depreciated items. All income tax details or
copies of your income tax are going to be available for five years in my
office. If you change rates filler, be sure to take him yours last incomes tax and
that they are also the depreciated list item.
