Question

I have a tax question about how to claim depreciation. How does the depreciation deduction affect itemizing deductions?

Answer

When you claim depreciation, your itemized deductions should not be affected if you are either of these:

  • Sole proprietor
  • Farmer

This applies whether you itemize on Schedule A or claim the standard deduction.

If you’re a sole proprietor, report your depreciation deduction as a trade or business expense. Report it on your Schedule C.

If you’re a farmer, use Schedule F.

You’ll claim depreciation as an itemized deduction if both of these apply:

  • You’re an employee.
  • You’re claiming depreciation as an unreimbursed employee business expense.

You’ll use Schedule A to itemize. Your depreciation deduction is subject to the 2% of adjusted gross income (AGI) limit. So, use depreciation when deciding whether to itemize or claim the standard deduction.

Related Topics