How Do I Calculate Asset Depreciation for My 2024 Tax Return?

Thanks for breaking that down! So if I understand correctly, with Section 179 I could just deduct all $6,150 this year? Would that be better than the bonus depreciation option? And do I need to create some kind of asset tracking spreadsheet for this?

Yes, with Section 179 you could deduct the entire $6,150 this year, which is often advantageous if you have enough business income to offset it. Since your business income is $42,000, you can fully utilize the Section 179 deduction. For record-keeping, you should maintain an asset log that includes: description of each item, date placed in service, cost, and the deduction method chosen. TurboTax will actually create this depreciation schedule for you, but keeping your own records is always smart. Make sure to keep all receipts for these purchases as well.

Does it work with rental property depreciation too? I have a duplex with a bunch of appliances and improvements I've made, and I'm completely lost on how to depreciate everything correctly.

Sounds interesting but I'm worried about security. How does taxr.ai handle sensitive financial information? Do they store copies of all your receipts and documents permanently?

Yes, it absolutely works with rental properties. It can handle residential buildings (27.5-year depreciation), commercial properties (39-year), and differentiate between land value (non-depreciable) and building value. It also correctly categorizes appliances and improvements with their appropriate shorter depreciation periods. Regarding security, they use bank-level encryption for all documents. You can actually delete your receipts and documents after processing if you want, and they don't store any of your actual tax return information - just the calculations you requested. I was pretty cautious too but their privacy policy explained everything clearly.

How does this even work? I thought it was impossible to get through to the IRS no matter what you did. Is there some trick to it?

Yeah right, nobody gets through to the IRS during tax season. I've tried calling dozens of times at different hours and always get the "due to high call volume" message. This sounds like a scam to get desperate people's money.

There's no special trick - they basically use technology to navigate the IRS phone tree and wait on hold for you. When they reach a human IRS agent, you get a call connecting you directly. It saves you from having to sit on hold for hours. I totally understand the skepticism - I felt the same way. The reason it works is they have a system that can stay on hold indefinitely and dial repeatedly if needed. Basically doing the frustrating part that makes most people give up. It's especially useful during tax season when wait times are ridiculous.

Thanks for the warning! I do have a dedicated office space that's only used for work (about 120 sq ft in my 1,800 sq ft home). I've been tracking all my home office expenses separately. Is there anything specific I should watch out for with the home office depreciation?

Since you have a dedicated space only used for business, you're on the right track. The main thing to watch for is the depreciation calculation itself. You can only depreciate the business portion of your home's value (not including land value), which in your case would be 120/1800 = 6.67% of the structure. You'll use Form 8829 to calculate this, and residential real property is depreciated over 39 years for business use. Also remember if you ever sell your home, you'll need to recapture that depreciation, even if you qualify for the home sale exclusion on gains. That's the part that surprises many people.

I switched from TurboTax to H&R Block Premium last year and found the depreciation section much more straightforward. TurboTax has more "wizards" but H&R Block gives you a better overview of all your assets on one screen. It also seemed to give better explanations of the different depreciation methods. Just my experience though.

This is incredibly helpful, especially the part about "placed in service" dates - I had no idea that mattered! Quick question about the business use percentage: how strict is the IRS about the 50% rule for computers? I probably use my laptop about 70% for business and 30% for personal stuff like streaming and personal emails. Do I need to track this somehow or is a reasonable estimate okay? And thanks for the spreadsheet idea - definitely going to set that up this weekend!

@KylieRose Great question about the business use percentage! For the 50% rule, a reasonable estimate based on actual usage is generally acceptable, but you should be able to support it if questioned. I'd recommend keeping a simple log for at least a few weeks showing business vs personal use - this gives you documentation of your usage pattern. The IRS doesn't expect you to track every minute, but they do want to see that your percentage claim is based on reality, not just wishful thinking. Your 70/30 split sounds reasonable for a consulting business. Some people use time-tracking apps or just keep a basic weekly log noting hours of business use vs total use. The key is being consistent and honest. If you claim 70% business use, make sure you can explain how you arrived at that number. Keep any records you use to calculate the percentage - even a simple diary showing "worked 6 hours, personal use 2 hours" for sample days can help justify your calculation. Also remember that once you establish a business use percentage, you should use that same percentage for all related deductions (not just depreciation, but also things like software subscriptions if applicable).

@Connor Murphy This is exactly what I needed to hear! I was leaning toward Section 179 but wasn t'confident about it. Your breakdown makes it crystal clear - deducting all $6,150 this year will definitely help with my tax bill. Quick follow-up question: since I bought the laptop in November 2024 but didn t'start my consulting business until January 2025, would the placed "in service date" be January 2025? And if so, would that mean I can t'claim it on my 2024 return? I m'a bit confused about the timing since I m'filing for 2024 but started the business in 2025. Also, thanks for the TurboTax tip about looking for Section "179 Election -" I kept missing that option!