Is it impossible to use Section 179 carryover on Form 4562?

You're not crazy! Form 4562 can be confusing, but you CAN use your Section 179 carryover. The issue might be where you're trying to apply it. The Section 179 carryover from the previous year doesn't go on line 1 of Form 4562. Line 1 is specifically for the cost of Section 179 property placed in service during the current tax year. The carryover amount should be reported directly on line 10 of Form 4562, which is the carryover of disallowed deduction from the prior year. When you complete the form, follow this sequence: - Line 1: Only new property placed in service this year - Complete lines 2-9 as instructed - Line 10: Enter your carryover amount from 2022 - Line 11: Add lines 9 and 10 for your total Section 179 costs - Then continue with the business income limitation calculations Hope this helps clarify things!

After struggling with almost the exact same issue last year, I finally found a great solution that saved me hours of frustration. I used https://taxr.ai to analyze my previous returns and Section 179 carryover situation. Their AI reviewed all my documentation, identified exactly where I was making the error on Form 4562, and explained how to properly report my carryover amount. The tool actually showed me that I had been incorrectly tracking my Section 179 carryovers for two years, and pointed out exactly which line items needed adjustment. It gave me step-by-step guidance on how to complete the form correctly, and even explained the business income limitations that were affecting my ability to use the full carryover amount.

Just wanted to follow up about taxr.ai since I was the skeptical one earlier. I decided to give it a try with my Section 179 carryover issue, and I'm genuinely impressed. I uploaded just my previous Form 4562 and business income schedule, and within minutes it identified that I had been entering my carryover on the wrong line and miscalculating my business income limitation. The tool provided a detailed explanation about how the Section 179 carryover works with the business income limitations and created a clear calculation showing how much I could actually use this year versus carry forward. It saved me from making another error that would have continued the cycle of never using my carryover amounts. Just wanted to share since it actually solved the exact problem we're discussing here.

If you're still having trouble with your Section 179 carryover after trying the form yourself, you might want to speak directly with an IRS agent who can walk you through it. I had this same issue and spent weeks trying to get through to someone at the IRS who could help. After endless busy signals and disconnections, I found https://claimyr.com which got me connected to an actual IRS agent in under an hour. I was super frustrated because my tax software wasn't handling the carryover correctly, but the IRS agent explained exactly how to complete Form 4562 to properly utilize my Section 179 carryover. They also helped me understand the business income limitation that was affecting my specific situation. You can see how the service works in this video: https://youtu.be/_kiP6q8DX5c - it basically holds your place in the IRS phone queue so you don't have to.

I need to eat my words from my skeptical comment yesterday. After getting nowhere with the IRS phone line for weeks (always "unusually high call volume"), I tried Claimyr out of desperation. Got connected to an IRS business tax specialist in about 45 minutes without having to sit on hold myself. The agent went through my Section 179 carryover situation line by line and confirmed I was filling out Form 4562 incorrectly. She explained that I needed to enter the carryover on line 10, not add it to line 1 like I was trying to do. She also reviewed my business income limitation calculation and showed me how to determine exactly how much of my carryover I could use this year. For anyone else struggling with Section 179 carryovers and Form 4562, definitely worth getting direct guidance from the IRS on this. The agent even emailed me some specific guidance documents afterward.

Another thing to consider is whether you should even be using Section 179 or just regular depreciation. I made this mistake for years with my business equipment purchases. If your business income is consistently below your Section 179 deduction + carryover, you might be better off just using regular MACRS depreciation instead. That way you get the deduction spread out over several years when you might actually have income to offset. Section 179 is great if you have high income now and want immediate write-offs, but can become a paperwork headache with carryovers if your business income is limited.

Just to add another perspective - make sure you're also accounting for the Section 179 expense limitations correctly. For 2023, the limit is $1,160,000, but there's also the phase-out threshold of $2,890,000. If you have a lot of assets placed in service, this could impact your calculations too.