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

Filing for a Deceased Taxpayer

If you need help handling an estate, we're here to help. Learn how to file taxes for a deceased loved one with H&R Block.

What’s Your Filing Status?

Choosing the wrong filing status is a common mistake. Do you know what your tax filing status is? Read on to learn about filing statuses with H&R Block.

Don’t Overlook the 5 Most Common Tax Deductions

From retirement account contributions to self-employment expenses, learn more about the five most common tax deductions with the experts at H&R Block.

New Baby, New House or New Spouse? How Major Life Changes Affect Your Taxes

Getting married? Having a baby? Buying a house? Go through your life events checklist and see how each can affect your tax return with the experts at H&R Block.