DEFINITION of IRS Form 4562: Depreciation and Amortization

IRS Form 4562: Depreciation and Amortization is a tax form used to claim deductions for the depreciation or amortization of both tangible and intangible property.

BREAKING DOWN IRS Form 4562: Depreciation and Amortization

When individuals or businesses purchase property to use in their business, the IRS does not allow them to claim the full cost as a business deduction in the first year. However, they can deduct a portion of their costs each year by claiming a depreciation deduction and reporting it on IRS Form 4562, Depreciation and Amortization.

Individuals and businesses can claim deductions for both tangible assets, such as a building, and intangible assets, such as a patent. But it cannot be used to depreciate land. Section 179 property, which is actively used to conduct business, cannot include investment property, hotels or property primarily held abroad.

A separate IRS Form 4562 has to be filed for each activity requiring the form. For example, a new form must be filled out for each depreciation or amortization deduction being claimed for different properties. The IRS does not require detailed depreciation records to be attached, but taxpayers should keep such records in order to calculate the depreciation deduction. Employees deducting job-related vehicle expenses should use Form 2106 instead of Form 4562.

For a guide to filling out Form 4562, check out Filling out Form 4562, step-by-step.