# US Expat: Depreciation under-reported



## debbie790 (Dec 28, 2010)

Hi,

I own a rental property since 2011, and have been claiming wrong depreciation amount (i.e. claiming $3000 instead of $4000). Even with $3000 I have been getting a rental loss every year. For 2014 I would like to claim the correct amount of $4000.

1. How do I correct the depreciation amount for 2011-2013?

2. Do I need to file amended returns for 2011-2013?

3. What forms do I need to file & submit for the amended returns.

Thanks
Debbie


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## Bevdeforges (Nov 16, 2007)

Basically, yes, you need to file amended returns for the years mentioned. Download form 1040X and the instructions for that form and all will be revealed.
Cheers,
Bev


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## BBCWatcher (Dec 28, 2012)

If your amendment could trigger a tax refund, I'd recommend acting with some reasonable speed. You have until April 15, 2015 (three years from the original earliest/normal filing deadline) to collect any refunds you're entitled to receive for tax year 2011. (In certain circumstances you might have until June 15 to claim a refund, but I wouldn't take the risk that the IRS would disallow your refund if you miss the April 15th deadline.)


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## debbie790 (Dec 28, 2010)

I don't think any of the lines in 1040X would be any different from the already filed 1040, since I will only be increasing the depreciation amount, and the only change will be increment in rental loss. Furthermore, from 2011-2013 my tax bill has been $0.00

Am I correct?


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## Bevdeforges (Nov 16, 2007)

To file a 1040X, something "substantive" has to be different from what you filed. If nothing else, the loss on your rental property, which I think you can carry forward. (You'd have to check that.) 

But you do want to amend your property records at the very least because on the sale of a rental property or if you should have a casualty claim or whatever, the basis of the property has to be adjusted by depreciation allowable, whether you actually took it or not. (One of those weird little "gotchas" buried in the tax code they warned us about in business school.)
Cheers,
Bev


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## BBCWatcher (Dec 28, 2012)

debbie790 said:


> Am I correct?


Probably. (I agree with Bev.) But you just have to re-run the numbers to be sure. There are all sorts of oddities in the U.S. tax code -- in most tax codes, for that matter.

For example, if the additional allowable rental loss reduces your income below a certain phase-out threshold you might find you now qualify for a refundable tax credit. In other words, $0 tax owed isn't actually the lowest tax rate. The IRS understands negative numbers, too, if/when you qualify. There are some filers who enjoy a negative total effective tax rate, i.e. free money from the IRS. Who knows -- you might be one of the lucky ones that way....

....Or not. You just re-run the numbers carefully. If you're not that lucky you might still be lucky (better off) in the future, as Bev points out.


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## debbie790 (Dec 28, 2010)

I agree, amendments must be made to correct the information. 

1. Should I attach a cover letter to notify IRS that the original 1040 and amended 1040X are same but the change is in rental loss?

2. Do I need to submit a copy of the original return along with the amended return?

Thanks


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## Bevdeforges (Nov 16, 2007)

Read the instructions for the 1040X, but I think the answer is "no" to both questions. You indicate on the 1040X which year's return you are amending and you only indicate the changes on the form itself (IIRC - it has been a few years since I filed a 1040X myself).
Cheers,
Bev


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