Depreciation and Depreciation Schedule FAQ

 

1. What is depreciation?

Depreciation is when a purchase of equipment or other business assets are "written off" little by little over their useable timespan instead of all in one year. This is on an IRS-specified timeline at certain percentages.

 

2. What is a depreciation schedule?

A depreciation schedule is a listing of what assets have been started with depreciation and where they are in the timeline, how much has already been deducted, and how much is left to go. They can look a little different depending on what software was used to generate it, but the key information is the same:

  • Asset name or description
  • Purchase date and cost
  • Expected life and salvage value (or $0 end of life value)
  • Current year depreciation
  • Cumulative depreciation
  • Book value (purchase cost - cumulative depreciation)

 It is usually attached to your tax return and often looks like a spreadsheet or chart. If it's not attached to your tax return, please reach out to your previous preparer for it. If you used DIY software, sometimes you can download a "complete copy" of your return, including all schedules and worksheets, and it may be with that.

 

3. Why is it important?

It tells us what has already been deducted, the method used, and what is left to deduct so we can accurately calculate this year's deduction. A depreciation schedule is not sent to the IRS, so we have no way to get it except from the client.

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For information about accounting, tax return amendments, sales tax filing, payroll, or anything else, please contact us using the form here. Thank you!

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