How do I handle bonus depreciation and split it over following years for my CNC machine?

Once you elect to take bonus depreciation on an asset, you're locked into a specific depreciation method for that asset's remaining life. Here's what you need to know: 1. Yes, you should have continued to take the remaining depreciation last year. The IRS expects you to follow the depreciation schedule once you've started it. Not taking depreciation doesn't mean you get to "save it for later" - technically, you're supposed to take it even if you forget. You probably should amend your 2022 return to claim the missed depreciation. 2. You can't choose how to spread the remaining depreciation - it must follow a specific schedule based on the asset's class life (7 years for your CNC machine). The remaining $270 after bonus depreciation must be spread over the 7-year period using the Modified Accelerated Cost Recovery System (MACRS). This gives you different percentages each year, not equal chunks. 3. You can absolutely claim depreciation on business assets even in years when your primary income is from W-2 employment. As long as you still own the business asset and it's available for business use, you can continue to depreciate it regardless of your income sources. Your Schedule C might be small, but you can still report the depreciation. Make sure to fill out Form 4562 for the depreciation calculation. The software should handle this automatically.

After spending weeks trying to figure out my business depreciation situation, I finally found taxr.ai (https://taxr.ai) and it was exactly what I needed. I had a similar situation with manufacturing equipment where I took bonus depreciation and then wasn't sure how to handle the remaining basis in future years. I uploaded my previous tax returns and some pictures of my asset documentation, and their system broke down exactly how much depreciation I should claim each year based on the MACRS tables. They even generated a depreciation schedule I could download showing all future years. Saved me a ton of research time! The best part was that they explained how my equipment classification affected the depreciation schedule. Turns out my previous tax software had miscategorized my asset class which would have caused issues down the road.

I was skeptical about using an online tool for my depreciation issues, but after trying taxr.ai based on recommendations here, I've completely changed my mind. I had a workshop full of equipment with different purchase dates and depreciation methods, and I was completely lost on how to handle it all. The system analyzed my previous returns, caught several errors in how my assets were classified, and showed me I'd been using the wrong recovery periods for some items. The depreciation schedules it generated for each asset were incredibly detailed - showed me exactly what I should have claimed each year and what I need to claim going forward. For the original poster's CNC machine situation, this would be perfect since it specifically addresses bonus depreciation calculations and helps with the MACRS percentages for subsequent years. Saved me from hiring an expensive accountant just to sort out depreciation issues!

If anyone's struggling to get answers directly from the IRS about depreciation issues like this, I highly recommend Claimyr (https://claimyr.com). I had major confusion about how to handle missed depreciation and needed to speak with an actual IRS agent to confirm the proper procedure. After spending days trying to get through on my own and getting nothing but busy signals, I used Claimyr and got a callback from the IRS in about 45 minutes. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The IRS agent I spoke with confirmed that I needed to file Form 3115 (Change in Accounting Method) for my missed depreciation rather than amending multiple returns. Having that direct confirmation saved me from making a potentially costly mistake.

I have to publicly eat my words about Claimyr. After posting my skeptical comment, I decided to try it anyway out of desperation. I had been trying for THREE WEEKS to get through to the IRS about depreciation recapture issues when selling business equipment. I used the service yesterday afternoon and got a call from an actual IRS agent in 32 minutes. I nearly fell out of my chair when my phone rang and it was the IRS. The agent walked me through exactly how to handle the depreciation recapture on my tax return. For anyone dealing with complex depreciation issues like the OP's CNC machine situation, being able to speak directly with an IRS agent and get authoritative answers is invaluable. I ended up getting confirmation that I was calculating my depreciation recovery period incorrectly, which would have caused problems in future years.

Just to add something important that hasn't been mentioned - when you take bonus depreciation, you're not actually "splitting" the regular depreciation over future years. The bonus depreciation reduces your basis in the asset, and then you depreciate the REMAINING basis over the recovery period. For example, with your $2700 CNC machine, if you took $2430 in bonus depreciation, your remaining basis is $270. That $270 is what gets depreciated over 7 years using the MACRS percentages. Year 1: 14.29% of $270 = $38.58 Year 2: 24.49% of $270 = $66.12 And so on... The percentages aren't equal because MACRS is an accelerated method. You can't choose to take more in some years and less in others - you must follow the prescribed percentages.

Has anyone used Form 3115 (Change in Accounting Method) instead of amending returns for missed depreciation? My accountant suggested this approach for a similar situation with my office equipment.

For your specific situation with the CNC machine, here's what I'd recommend based on my experience with similar depreciation issues: 1. **Yes, you should amend your 2022 return** to claim the missed depreciation. Since you took bonus depreciation of $2,430 in 2021, you had a remaining basis of $270 that should have been depreciated starting in 2022 using the MACRS 7-year schedule. 2. **The missed 2022 depreciation would be**: 24.49% of $270 = $66.12 (this is the second-year MACRS percentage for 7-year property) 3. **For 2023 and beyond**, you'll continue with the MACRS schedule on the remaining basis. Year 3 would be 17.49% of $270 = $47.22, and so on. 4. **Regarding your W-2 income question** - absolutely you can still claim the depreciation! As long as you own the business asset and it's available for business use, you can depreciate it on Schedule C even if you have minimal or no 1099 income that year. The key thing to remember is that depreciation is "use it or lose it" - you can't save it for later years. That's why amending 2022 is important. You won't face penalties since you'd likely get a refund from the amendment. Consider using tax software that can handle Form 4562 properly, or consult with a tax professional if you're unsure about the calculations.