Comment from Cristine -
October 28, 2008 at 10:23am
I did not file form 4562 for depreciation on my automobile. I claimed auto expense deduction on Schedule C and noticed from prior yr returns there was form 4562. 2007 was the first time I prepared my own taxes. The past 2 yrs taxes were prepared by a tax professional what do I need to do? File amended Federal 1040 with the correct form? How much time do I have? Should I contact the IRS?
Answer: Cristine - When you prepared your own return this year did you follow the roadmap that your tax professional did as far as other expenses of your business? If he was claiming depreciation on your vehicle then he was deducting actual car expenses such as gas, oil, tires, parking fees, etc. Did you do the same? If so, then you should go back an amend the return to claim the depreciation deduction. You have three years from the due date of the return to do this. However I would not wait that long because the depreciation you claim on your 2007 will be used to determine the deduction for your 2008 tax return. To amend your return you will need Form 1040X, US Individual Amended Income Tax Return. Schedule C, Profit or Loss from Business. Schedule SE, Self-Employment Tax and Form 4562, Depreciation and Amortization.
Generally cars are depreciated over
a 5 year period. You will need to determine from the first year the car was depreciated what method was used. That will be in Part V on the Form 4562, Depreciation and Amortization. that was included with your 2005 return. That will tell you the date placed in service, percentage of business use, cost or other basis, basis for depreciation, numer of years the vehicle is being depreciated, the method of depreciation and the depreciation deduction. You will have the same information from your 2006 tax return. Using that information you should be able to determine the amount of depreciation to claim in the third year. You will want to use Publication 463, Travel, Entertainment, Gift and Car Expenses. as a guide. The MACRS Depreciation Chart can walk you through the calculation based on the % of depreciation used.
You can always call IRS at (800) 829-1040 for further assistance or touch base with a tax professional. When you are running your own business often a tax professional can be an invaluable resource and well worth the cost (which is also a tax deduction) so you don't have to waste your valuable time sorting this type of issue out.
For additional information and IRS forms and publications you can visit www.irs.gov to print, download, view or order forms and publications or you can call (800) 829-3676 to have the forms and publications mailed to you.