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IRS Form 4562: Complete Guide for 2026

Form 4562 — Depreciation and Amortization

Form 4562 is used to claim depreciation on business assets, Section 179 expensing, and bonus depreciation. When you purchase equipment, vehicles, computers, or other assets for your business, you generally can't deduct the full cost in the year of purchase — instead, you depreciate it over its useful life. This form also covers amortization of intangible assets like patents and goodwill.

Who Needs to File

Any business owner who placed depreciable property in service during the tax year, claims Section 179 expensing, or claims bonus depreciation. Also required if you claim depreciation on listed property (vehicles, computers used partly for personal purposes). If you bought equipment costing more than $2,500, you likely need this form.

Filing Deadline

Filed with your Form 1040 and Schedule C. Due April 15, 2027 for tax year 2026.

Key Lines Explained

Part I, Line 1Maximum Section 179 deduction

The maximum amount you can expense under Section 179 for 2026 is $2,560,000. That cap is reduced dollar for dollar once you place more than $4,090,000 of Section 179 property in service during the year. Section 179 lets you deduct the full cost of qualifying assets in the year of purchase instead of depreciating over time. Sport utility vehicles have their own separate cap of $32,000 for 2026.

Part II, Line 14Special depreciation allowance (bonus depreciation)

Bonus depreciation allows you to deduct a percentage of an asset's cost in the first year. For 2026 the rate is 100% for qualified property acquired after January 19, 2025 — the One Big Beautiful Bill Act removed the old annual phase-down and made 100% permanent. Property acquired on or before January 19, 2025 stays on the older phase-down schedule, and property is not treated as acquired after that date if you signed a written binding contract for it beforehand. Applies to new and used property.

Part VListed property

Assets used for both business and personal purposes, such as vehicles, cameras, and computers. You must track and report the business-use percentage. If business use is 50% or less, you cannot use Section 179 or bonus depreciation.

Line 22Total depreciation

The total depreciation claimed for all assets. This amount flows to Schedule C as a deduction against business income.

Common Mistakes to Avoid

  1. 1

    Not electing Section 179 when it would be more beneficial than regular depreciation, especially for small purchases

  2. 2

    Forgetting to track business-use percentage for listed property like vehicles — the IRS requires contemporaneous records

  3. 3

    Exceeding the Section 179 income limitation (you cannot create a business loss with Section 179)

  4. 4

    Assuming bonus depreciation is still phasing down — the One Big Beautiful Bill Act restored a permanent 100% deduction for qualified property acquired after January 19, 2025, so the old declining schedule no longer applies to most new purchases

  5. 5

    Failing to account for the luxury auto depreciation limits when depreciating a passenger vehicle

Where TaxTidy Fits on Form 4562

Depreciation gets decided years after the purchase, from a receipt most people no longer have. TaxTidy keeps the receipt. Equipment purchases are captured with the vendor, amount and date read off the image, and the image itself stored with the expense — so when you and your CPA choose between Section 179, bonus depreciation and a normal schedule, you are choosing from a record instead of a memory. Ask Fin which of your expenses look more like assets than supplies and he will point at the actual line items.

Almost every mistake listed above starts the same way — a number nobody could back up when the form asked for it. TaxTidy keeps the receipt behind each number attached to it, so the figure you enter has something underneath it.

Frequently Asked Questions

What is Section 179 and should I use it?

Section 179 lets you deduct the full purchase price of qualifying business equipment in the year you buy it, instead of depreciating it over several years. It's beneficial for small businesses that want immediate tax relief. However, you can't use Section 179 to create a business loss — the deduction is limited to your taxable business income.

What is the difference between Section 179 and bonus depreciation?

Section 179 is an election to expense qualifying assets up to an annual limit ($2,560,000 for 2026) and cannot create a business loss. Bonus depreciation applies automatically to eligible property and can create a loss. For 2026, bonus depreciation is 100% on qualified property acquired after January 19, 2025. Many businesses use Section 179 first, then bonus depreciation on the remaining cost.

How do I depreciate a vehicle used for business?

Vehicles are "listed property" with special rules. You must document business-use percentage with a mileage log. If business use exceeds 50%, you can use Section 179 or bonus depreciation, subject to the annual passenger-automobile depreciation caps. For a car placed in service in 2026 the first-year cap is $20,300 if bonus depreciation applies and $12,300 if it does not. If business use is 50% or less, you must use straight-line depreciation over 5 years.

TaxTidy provides expense organization tools based on the most current US tax law available to it. TaxTidy is not a CPA, Enrolled Agent, or licensed tax professional. All categorizations, deductions, and tax calculations are estimates. Please verify all data for accuracy and consult a certified tax professional before filing.

Fill In Form 4562 From Records, Not Memory

TaxTidy sorts your receipts by IRS line number as you go. Your first 25 scans are on us — free for life, no credit card.

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