February 4, 2009
TurboTax Error on Form 4562 Calculating Maximum Section 179 Expensing Depreciation Limitation?
Posted by Alan Childress
Wildly off topic but hopefully helpful to someone, as I am finding nothing on this by googling turbotax error form 4562 (or as Turbo Tax.) I want someone to be able to find this post if they suspect the same thing (to phone Intuit I started to go through their online hoops, plus possibly pay, and anyway there is an easy fix, so I quit that and posted this, fwiw). Maybe it is just me and something I did wrong, but when I tried to expense an asset placed in service in 2008, it showed an "error" that I exceeded the limitation and could not expense it. Since I teach, and this asset is less than $1500, I really doubted I exceeded any maximum set for the real world. Had TurboTax made a mistake in disallowing this depreciation for me? (I am using this year's deluxe federal, for tax year 2008.)
So I went to the actual form that shows the limitation, at form 4562, and my Turbo Tax seemed to be subtracting $250,000 FROM zero [rather than $250,000 MINUS zero] to arrive at the "dollar limitation for tax year" on line 5. If so, I am of course way below the maximum and I can expense the asset fully this year (and could expense another 248k to boot if I had such an asset). So if it is setting the maximum you can expense at zero [as the rounded result of negative 250k], that disallows expensing anything.
The easy fix is to override line 5 and place it back to 250,000 by right click on the figure in the form itself. Now it expenses it, in full, without showing an error alert. That seems to be the correct result. I hate overriding anything, but I am certain that there is no ceiling of zero or $1500 on 179 expensing. You may have to override somewhere else where it asks the same limitation question for state purposes, because originally I got two error alerts and made two overrides--restoring the ceiling--before I forgot where the second one is.
These should show up by running error alert, but the real risk is that your program may just disallow the expensing and not think it is an error. You may only get the error if you insist on taking the expense this year as a whole. So unless I am off about all this, users of TurboTax this year (which I normally love but something as basic as the "from" versus "minus" switch scares me, and this year's version seems more confusing to me overall than previous ones) may want to be sure any asset they thought they depreciated via expensing under section 179 got done--they ought to double check that the full value is in fact taken off where it is supposed to be (in my case on schedule C, line 13, which it now is).
If I am wrong, Intuit, let me know and I will post an update here. If someone else thinks theirs is zeroing out the ceiling too, please comment here. I have already tried the interactive Ask Tina function and it does not understand me no matter how I phrase this. It thinks I want to save my file and cannot. One question I posed in 6 words she asked me to make shorter. I'll go try: Is 4562 fubar? Here is a site reporting multiple customer complaints about [other] calculation errors in the program, including an apparently common one of real problems on the TY07 Massachusetts [Jeff!] and Rhode Island state forms transferring the wrong income info. So I will double check everything this year the old fashioned way.
UPDATE: Thank you to the VP of Intuit for his two helpful comments below. I will double check his ideas and follow up.
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Paul Caron is clearly having a greater influence on your blogging than I could have imagined. A Turbotax post? Geez.
On a quasi-serious note, I'd bet that somebody who works at Turbotax reads Caron's blog. If you get him to link to your post, I think you might get a personal reply. Maybe even a free upgrade. (Get one for me too while you're at it.)
Posted by: Andrew Perlman | Feb 4, 2009 8:55:30 PM
I received the same error today but not yesterday. I "revisted" the section today and am not receiving the error
Posted by: mary | Feb 4, 2009 10:26:39 PM
Thanks for the heads-up on Massachusetts, Alan, but the last year for which I did my own taxes was 1992.
Posted by: Jeff Lipshaw | Feb 5, 2009 5:47:15 AM
Jeff: Since your CPA or tax lawyer now uses this or other software, I guess I am saying to be your paranoid self from your other [excellent] Zoots post; read and review the numbers, even the math, before you sign and file.
Mary: The error code itself was sporadic but the underlying zero limit was persistent, when I did mine, so I hope you found the actual error went away. Even so, some people who read this maybe filed before yesterday.
Andy: Great idea. I will write to him, thanks. I just want some people to catch this issue on theirs before they file, and not generally to trust every spreadsheet: the cells are created by us soylent green (get your dad to explain the term). This program often does not let me sign as Alan, for example. Instead I remain,
Posted by: Legal Profession | Feb 5, 2009 7:56:25 AM
Alan... I suspect your section 179 deduction may be limited because of:
1) Your income from your business activity may not be sufficient to absorb the full write off or
2) The asset may not qualify for 179 expensing or
3) Your business use percentage for the asset may be less than 50%.
Although we are not aware of any issue in this area, please email me details of your issue so I can follow up. You have my email address as part of my registration here.
Andy... Alan has lots of influence with TurboTax (and the world) so I don't think he needs to ride the coattails of Paul C. :-)
Posted by: Bob Meighan | Feb 5, 2009 8:02:00 AM
About the error code or zero flipflopping... I suspect that as your income from the specific activity increases/decreases, the amount of your section 179 deduction may also change. One thing to remember is that your 179 deduction cannot create a loss. So depending on your income (from the activity in which you have the assets), you may or may not get the full expensing. Taxes can be frustratingly complicated and its results will often perplex even the most experienced tax practitioners.
Posted by: Bob Meighan | Feb 5, 2009 8:07:45 AM
"Soylent green." I'm embarrassed to report that I created a rather unfortunate prank in college where I emerged from a cafeteria with a plate of food yelling, "It's made of people." I got a lot of blank stares. It wasn't my proudest moment.
Posted by: Andrew Perlman | Feb 5, 2009 9:50:49 AM
TO: BOB MEIGHAN
Dear Mr. Meighan,
Please help ! I am at a total loss as to where to turn to next. I have ordered TurboTax Deluxe CD 6 times starting on December 29, 2008. Each time I call I am told that my order will be out in 3-5 business days and the reason I have not yet received it is because for some unknown reason it has been cancelled. I have been assured each time that it is now ordered and will be delivered in 3-5 business days. The last time I have ordered was on 2/1/2009. At this time I was told that they were very sorry for all the trouble that has occurred and that my CD will be sent out UPS, AIR, NEXT DAY DELIVERY. I STILL HAVE NOT received it. Each time I call I ask to speak to a manager or supervisor and am always told that no one is available at this time but was assured my order will be given its highest priority.
One and one half months is absolutely above and beyond my call of duty for patience.
You intervention into this fiasco will be forever appreciated.
for Julie Kaufmann
Home Phone: 952-941-6629
Work Phone: 952-921-2185
Two of the Order Numbers:
Posted by: Kip Kaufmann | Feb 6, 2009 10:12:30 AM
I am having the same deductions proplem. I go through the work sheet, enter the amount I paid and the amount I want to depreciate and end up with zero in the depreciation box. I am frustrated after having spent 3 hours on taxes today alone. I know I lost money in my business last year but my wife paid way to much in taxes and I want it all back. Why give it to corporations to pay out bonuses through bail out packages. I need it more.
Posted by: brandon | Feb 8, 2009 8:01:24 PM
I also found some issues with Section 179 deduction but in the "recapture" due to a business I sold. The interview asked if I took a 179 deduction, I said yes and entered the amount, the amount shown on the form was almost double. I have researched and cannot determine how the recapture could be twice the original deduction. I gave up!
Posted by: Mark | Mar 9, 2009 5:42:19 PM
Alan, I had the same thing happen to me. I started a small sideline which only took in about 7K and I spent a little over 2K on items for the business. During error check the program flagged line 5 of 4562 in which the value was "0". When I went over the form it was apparent the value should have been "250,000". I overrode the entry and now TT will not file electronically because I overrode the line. I went back and tried a few things slightly differently and also deleted the business section from the return and re-entered it. Now it is not picking up on everything any more so I have to start from scratch. VERY AGGRAVATING!
Posted by: Jack | Feb 3, 2010 9:47:51 PM
Oops. Didn't realize this was a year old.
Posted by: Jack | Feb 4, 2010 10:30:46 PM