This article from AIM Financial IRS is IRS Form 4562: Depreciation and Amortization. This form helps eligible businesses report deductions for equipment, machinery, business vehicles, and certain other assets. For 2025 tax returns, the rules are especially important because eligible property acquired and placed in service after January 19, 2025, may qualify for a restored 100% special depreciation allowance, subject to IRS requirements.

From AIM Financial — Tax Preparation Services in Grand Rapids, Kentwood, Wyoming, and West Michigan

Business owners regularly purchase equipment, computers, office furniture, machinery, vehicles, and other assets to keep their companies operating. But how do you deduct these purchases on your federal income tax return? In many cases, the answer involves IRS Form 4562, Depreciation and Amortization.

Understanding Form 4562 can help small business owners, self-employed individuals, landlords, and other taxpayers report qualifying expenses correctly and avoid missing valuable deductions. AIM Financial helps taxpayers in Grand Rapids, Kentwood, Wyoming, and throughout West Michigan understand business tax reporting and prepare accurate tax returns.

What Is IRS Form 4562?

IRS Form 4562 is used to calculate and report depreciation and amortization deductions, elect certain immediate business expense deductions under Section 179, and report information about business vehicles and other listed property.

Depreciation allows a business to recover the cost of qualifying property over time rather than deducting the entire cost in one year. Depending on the property and applicable tax rules, however, a business may qualify to deduct a substantial portion—or potentially all—of an eligible asset’s cost in the year it is placed in service. <Cite refs={[“turn220613search0″,”turn306720search1”]}/>

Form 4562 may be relevant to sole proprietors, partnerships, corporations, S corporations, and taxpayers with qualifying rental activities. The form and its instructions explain where the deduction is reported based on the type of business and tax return.

What Types of Property Can Be Depreciated?

Many assets used in a business or income-producing activity may qualify for depreciation. Examples include:

• Computers, printers, and other office equipment.
• Desks, chairs, shelving, and business furniture.
• Manufacturing equipment and machinery.
• Business vehicles, subject to special limitations.
• Certain improvements to business or rental property.
• Certain software, patents, and other eligible intangible assets.

To generally qualify for depreciation, property must be owned by the taxpayer, used in a business or income-producing activity, have a determinable useful life, and be expected to last longer than one year. Land itself generally cannot be depreciated, although a qualifying building on the land may be depreciable. Personal-use property does not qualify simply because the owner also operates a business. <Cite refs={[“turn306720search1″,”turn220613search7”]}/>

If an asset is used partly for business and partly for personal purposes, the deductible amount generally must reflect the qualifying business or income-producing use. Accurate records are especially important for vehicles and other property with mixed use.

What Is Section 179?

Section 179 allows eligible businesses to elect to deduct the cost of certain qualifying property in the year it is placed in service instead of recovering that cost through regular depreciation over several years.

For tax years beginning in 2025, the maximum Section 179 deduction is generally $2.5 million, reduced when the total cost of qualifying Section 179 property placed in service exceeds $4 million. Special rules and restrictions apply, including a business-income limitation and separate rules for certain vehicles. <Cite refs={[“turn306720search0″,”turn306720search1”]}/>

These limits are tax-year specific and may change. A business owner should not assume that every purchase qualifies or that the entire purchase price can automatically be deducted.

For example, a small business that purchases qualifying equipment may be able to elect a Section 179 deduction. The owner must consider the property’s eligibility, business-use percentage, taxable business income, and overall tax circumstances before deciding whether to use this deduction.

What Is Bonus Depreciation?

Bonus depreciation, also called the special depreciation allowance, can permit an additional first-year deduction for qualifying property.

For certain qualified property acquired and placed in service after January 19, 2025, federal law restored a 100% special depreciation allowance. Certain qualifying property acquired before January 20, 2025, and placed in service during 2025 may instead be subject to the previous phase-down rules, generally a 40% allowance for eligible property, with different rules for certain long-production-period property and aircraft. Eligibility depends on the acquisition date, placed-in-service date, property type, and other requirements. <Cite refs={[“turn306720search0″,”turn306720search1”]}/>

This distinction matters when preparing 2025 tax returns. Two businesses that purchased similar equipment in the same year may have different depreciation outcomes because the property was acquired or placed in service on different dates.

Bonus depreciation is not always the best choice for every taxpayer. A larger deduction today may reduce deductions available in future years, so the overall tax impact should be considered.

How Do You Complete Form 4562?

The form contains several parts for different depreciation and expense-deduction situations. In plain English, the main sections generally cover:

• Part I: Section 179 expense deduction elections.
• Part II: Special depreciation allowance and certain other depreciation.
• Part III: Depreciation under the Modified Accelerated Cost Recovery System, commonly called MACRS.
• Part IV: Summary of depreciation and related deductions.
• Part V: Information and calculations for listed property, including certain vehicles.
• Part VI: Amortization for qualifying costs.

The applicable entries depend on the asset, the date it was placed in service, its cost, business-use percentage, depreciation method, and any elections being made. Not every taxpayer completes every part. Always use the instructions for the correct tax year. <Cite refs={[“turn306720search0″,”turn220613search0”]}/>

What About Business Vehicles?

Vehicle deductions require particular care. Passenger automobiles may be subject to annual depreciation limits, and special rules can apply to heavier vehicles, leased vehicles, and vehicles used for both business and personal travel.

Business owners should maintain mileage logs or other reliable records showing business travel, total mileage, and personal use. Commuting between home and a regular workplace generally is not deductible business mileage merely because the taxpayer owns a business.

Listed-property rules can also require additional reporting. If business use of certain property falls to 50% or less, special depreciation rules and possible recapture of previous deductions may apply. <Cite refs={[“turn306720search0″,”turn306720search1”]}/>

Records You Should Keep

Before claiming depreciation, gather and retain:

• Purchase invoices and receipts.
• The date each asset was acquired and placed in service.
• The asset’s cost and any qualifying installation costs.
• Records supporting business-use percentages.
• Vehicle mileage logs, when applicable.
• Prior-year depreciation schedules and tax returns.
• Documentation supporting any Section 179 or bonus depreciation election.

Good records help support deductions and make it easier to prepare future returns or determine the tax consequences if an asset is sold or taken out of service.

How AIM Financial Can Help With Business Tax Preparation

Depreciation rules can be complicated, particularly when a business buys several assets, operates vehicles, owns rental property, or needs to choose between Section 179, bonus depreciation, and regular depreciation.

AIM Financial helps taxpayers in Grand Rapids, Kentwood, Wyoming, and throughout West Michigan with tax preparation and business tax reporting. If you purchased equipment, a vehicle, computers, machinery, or rental-property improvements, professional tax preparation can help you determine what information is needed and how eligible deductions should be reported.

Contact AIM Financial to discuss your tax preparation needs and help ensure your business assets are considered when preparing your federal income tax return.

Final Thoughts

IRS Form 4562 plays an important role in reporting depreciation, amortization, Section 179 elections, and certain vehicle-related information. Because the rules depend on the type of property, business use, acquisition date, and tax year, keeping good records and reviewing current IRS instructions are essential.

For help understanding depreciation and preparing your business tax return, turn to AIM Financial, serving Grand Rapids, Kentwood, Wyoming, and West Michigan.