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

Related Resources

Do You Need To Itemize Charitable Donations?

Do you need to itemize your charitable donations to claim them on your taxes? Learn more from the tax experts at H&R Block.

Filing Taxes After Moving to Another State

If you moved in the last tax year, you’ll have additional considerations when filing your taxes. Let H&R Block help you file after moving to another state.

First-Time Home Buyer Tax Credit

Will being a first-time homeowner affect your tax return? What deductions can you claim? Learn more from the tax experts from H&R Block.

Claim Standard Deduction And Itemized Expenses

Can you claim both a standardized deduction and itemized expenses? Learn more from the tax experts at H&R Block.