TurboTax Error on Form 4562 Calculating Maximum Section 179 Expensing Depreciation Limitation?

Posted by Alan Childress

Wildly off topic but hopefully helpful to someone, as I am finding nothing on this by googling turbotax error form 4562 (or as Turbo Tax.) I want someone to be able to find this post if they suspect the same thing (to phone Intuit I started to go through their online hoops, plus possibly pay, and anyway there is an easy fix, so I quit that and posted this, fwiw).  Maybe it is just me and something I did wrong, but when I tried to expense an asset placed in service in 2008, it showed an “error” that I exceeded the limitation and could not expense it.  Since I teach, and this asset is less than $1500, I really doubted I exceeded any maximum set for the real world.  Had TurboTax made a mistake in disallowing this depreciation for me? (I am using this year’s deluxe federal, for tax year 2008.)

So I went to the actual form that shows the limitation, at form 4562, and my Turbo Tax seemed to be subtracting $250,000 FROM zero [rather than $250,000 MINUS zero] to arrive at the “dollar limitation for tax year” on line 5.  If so, I am of course way below the maximum and I can expense the asset fully this year (and could expense another 248k to boot if I had such an asset).  So if it is setting the maximum you can expense at zero [as the rounded result of negative 250k], that disallows expensing anything.

The easy fix is to override line 5 and place it back to 250,000 by right click on the figure in the form itself.  Now it expenses it, in full, without showing an error alert.  That seems to be the correct result.  I hate overriding anything, but I am certain that there is no ceiling of zero or $1500 on 179 expensing.  You may have to override somewhere else where it asks the same limitation question for state purposes, because originally I got two error alerts and made two overrides–restoring the ceiling–before I forgot where the second one is. 

These should show up by running error alert, but the real risk is that your program may just disallow the expensing and not think it is an error. You may only get the error if you insist on taking the expense this year as a whole.  So unless I am off about all this, users of TurboTax this year (which I normally love but something as basic as the “from” versus “minus” switch scares me, and this year’s version seems more confusing to me overall than previous ones) may want to be sure any asset they thought they depreciated via expensing under section 179 got done–they ought to double check that the full value is in fact taken off where it is supposed to be (in my case on schedule C, line 13, which it now is).

If I am wrong, Intuit, let me know and I will post an update here.  If someone else thinks theirs is zeroing out the ceiling too, please comment here.  I have already tried the interactive Ask Tina function and it does not understand me no matter how I phrase this.  It thinks I want to save my file and cannot.  One question I posed in 6 words she asked me to make shorter. I’ll go try: Is 4562 fubar?  Here is a site reporting multiple customer complaints about [other] calculation errors in the program, including an apparently common one of real problems on the TY07 Massachusetts [Jeff!] and Rhode Island state forms transferring the wrong income info.  So I will double check everything this year the old fashioned way.

UPDATE:  Thank you to the VP of Intuit for his two helpful comments below.  I will double check his ideas and follow up.