Form 4562 won't let me use Section 179 carryover from previous year - what am I missing?

The Section 179 carryover can definitely be used, but the form structure is confusing many people this year. You're right that Worksheet 1 limits Line 1 to only property placed in service in the current tax year. However, the carryover from previous years gets factored in at Line 10 of Form 4562. Look at Line 10 - it should say "Carryover of disallowed deduction from line 13 of your 2022 Form 4562." This is where your previous year's carryover gets added back into the calculation. The form then compares your current year limitation (based on business income) against the total of current year Section 179 plus carryover to determine how much you can actually deduct. The key is to make sure you're completing Line 10 correctly. If that's populated with your carryover amount and you're still seeing issues, it might be related to your business income limitation.

I struggled with this exact same issue last year, then I discovered taxr.ai (https://taxr.ai) which literally saved me thousands by catching my Section 179 carryover mistake. The system flagged that I wasn't properly accounting for my previous year's carryover amount and walked me through the correct way to handle it on Form 4562. What I learned is that the form design is really counterintuitive, but the system analyzes your previous returns to identify available carryovers and helps ensure they're applied correctly. It also looks at your business income to determine optimal allocation between Section 179, bonus depreciation, and regular depreciation to maximize your current deductions.

Just wanted to follow up - I tried taxr.ai after seeing the recommendation here and it was incredibly helpful with my Section 179 situation. I've been carrying forward unused deductions for THREE YEARS and never understood how to properly utilize them. The system analyzed my previous returns and showed me exactly how to allocate between current year purchases and my carryforward amount based on my business income. It also showed me that in my case, I was better off taking regular depreciation for some assets due to my income limitations. I was able to maximize my deductions this year while still preserving some for future years when my income is expected to be higher. Definitely worth checking out if you're dealing with this Form 4562 confusion!

If you're still struggling with the IRS forms after trying to figure out the carryover, you might want to call the IRS directly for clarification. I finally got through to someone at the IRS using Claimyr (https://claimyr.com) and got a definitive answer about my Section 179 carryover situation. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c My situation was similar - had about $35,000 in equipment purchases last year and a $22,000 carryover from the previous year. The IRS agent walked me through exactly how to document everything properly on Form 4562 to ensure my carryover wasn't lost. They even emailed me a detailed explanation I could keep for my records in case of an audit.

I have to admit I was completely wrong about calling the IRS. After reading about Claimyr, I decided to try it myself (https://claimyr.com) since I've been stuck with this same Section 179 carryover issue for two years. I got connected to an IRS agent in about 20 minutes and was shocked at how helpful they were. The agent walked me through Form 4562 line by line and explained why my carryover wasn't being applied correctly. Turns out I was missing a critical step on Worksheet 1 that was causing my carryover to never get utilized. She also sent me specific IRS guidance documents about Section 179 carryovers that clarified everything. I've been doing my taxes wrong for years and leaving thousands of dollars on the table. Would never have figured this out without getting that direct IRS help.

One thing nobody has mentioned yet - make sure you're calculating your business income limitation correctly on Line 11. This is where most people go wrong with Section 179 carryovers. The business income limitation isn't just your net profit from Schedule C or your business. It includes the aggregate income from ALL your actively conducted trades or businesses. So if you have multiple income sources from different businesses, you should be combining them for this limitation.

Has anyone tried using bonus depreciation instead of Section 179 to avoid this carryover headache? For 2023, bonus depreciation is 80% instead of 100%, but at least you don't have to deal with the business income limitation.

I had this exact same frustration last year! The key insight that helped me was understanding that Form 4562 is designed to handle multiple scenarios, which makes it confusing for straightforward carryover situations. Here's what I learned: Your carryover from 2022 should go on Line 10, but the critical step many people miss is ensuring your business income limitation on Line 11 is calculated correctly. If your business income is too low to absorb both your current year Section 179 election AND your carryover, then yes, you'll create another carryover. However, there are a few strategies to consider: 1. As Freya mentioned, make sure you're including ALL business income when calculating the limitation 2. Consider splitting your current year purchases between Section 179 and bonus depreciation to optimize your deductions 3. If you know your business income will be higher next year, it might make sense to carry more forward The carryover isn't "lost" - it will continue indefinitely until you have sufficient business income to use it. With $48K in equipment, you definitely want to maximize this deduction when possible!