If you are preparing your U.S. taxes and have a business and are filing Form 4562 (Amortization and Depreciation), be aware that there is an error in the instructions regarding Line 1 (in the part on Section 179 expenses).

In fact, the instructions tell you up to three different numbers to put in that box and they can differ by over a half a million dollars.

For most filers -- particularly the kind of businesses that members here might have -- the impact is minimal. I believe the only way that it will actually change your taxes is if you are carrying forward unallowed Section 179 deductions from the prior year and are writing off most/all of this year's Section 179 property. You will be unable to do so and led to believe that you must carry it forward again even if you don't.

The intent of the instructions is clear if you go back and look at prior years; a similar but somewhat different error was in last year's instructions, but you don't have to go back far at all before you get to when the number of Line 1 was preprinted on the form and that line means the same today as it has for years and years. If you use the printed instructions, you will get the correct value. But if you follow their suggestions and use the provided worksheet you will be directed to put two possibly different numbers on that line, neither of which is correct.

I called the IRS and they first tried to direct me to their website for information on how to fill out the form. It took took two more attempts before the fact that I was trying to report an error in the instructions sank in. So the representative went away and came back and told be that that was currently "out of season" and that no live support could be provided until after the tax filing season was over. When I asked if that meant that the IRS didn't care about correcting errors in the instructions that taxpayers were using to file their taxes, she responded, "I didn't say that." To which I responded, "Uh.. it kinda, sorta, sounds like you did." To which she said, "I can see how you would conclude that."

When I asked how I was supposed to report an error in the form so that it could at least be corrected on next year's version and I told her that I couldn't find any place on their site to do so, she told me that both her and her supervisor looked while I was on hold and they couldn't find any place, either.

So I will just send a letter to them and we'll see what happens.

The sad/funny part is that the Tax Court has long-since established that the individual taxpayer is ultimately responsible for filling out their taxes correctly even when they can prove that the information provided by the IRS upon which they relied was incorrect.

 

https://www.irs.gov/forms-pubs/comment-on-tax-forms-and-publications

 

https://www.irs.gov/forms-pubs/comment-on-tax-forms-and-publications

Thanks. I've submitted the error report.

While I'm not surprised that I couldn't find this page, it's a bit troubling that neither the IRS representative nor her supervisor could.

It'll be interesting to see if they correct the worksheet.

 

If you are preparing your U.S. taxes and have a business and are filing Form 4562 (Amortization and Depreciation), be aware that there is an error in the instructions regarding Line 1 (in the part on Section 179 expenses).

In fact, the instructions tell you up to three different numbers to put in that box and they can differ by over a half a million dollars.

For most filers -- particularly the kind of businesses that members here might have -- the impact is minimal. I believe the only way that it will actually change your taxes is if you are carrying forward unallowed Section 179 deductions from the prior year and are writing off most/all of this year's Section 179 property. You will be unable to do so and led to believe that you must carry it forward again even if you don't.

The intent of the instructions is clear if you go back and look at prior years; a similar but somewhat different error was in last year's instructions, but you don't have to go back far at all before you get to when the number of Line 1 was preprinted on the form and that line means the same today as it has for years and years. If you use the printed instructions, you will get the correct value. But if you follow their suggestions and use the provided worksheet you will be directed to put two possibly different numbers on that line, neither of which is correct.

I called the IRS and they first tried to direct me to their website for information on how to fill out the form. It took took two more attempts before the fact that I was trying to report an error in the instructions sank in. So the representative went away and came back and told be that that was currently "out of season" and that no live support could be provided until after the tax filing season was over. When I asked if that meant that the IRS didn't care about correcting errors in the instructions that taxpayers were using to file their taxes, she responded, "I didn't say that." To which I responded, "Uh.. it kinda, sorta, sounds like you did." To which she said, "I can see how you would conclude that."

When I asked how I was supposed to report an error in the form so that it could at least be corrected on next year's version and I told her that I couldn't find any place on their site to do so, she told me that both her and her supervisor looked while I was on hold and they couldn't find any place, either.

So I will just send a letter to them and we'll see what happens.

The sad/funny part is that the Tax Court has long-since established that the individual taxpayer is ultimately responsible for filling out their taxes correctly even when they can prove that the information provided by the IRS upon which they relied was incorrect.

This is why I hire an accountant.

I spend my time making money so the government can tax it.

 

This is why I hire an accountant.

I spend my time making money so the government can tax it.

Out of curiosity, ask your accountant if they are aware of the error in the Form 4562 instructions. They probably aren't. Of course, if not and if there's an issue, at least you have someone to sue.

 

Thanks. I've submitted the error report.

While I'm not surprised that I couldn't find this page, it's a bit troubling that neither the IRS representative nor her supervisor could.

It'll be interesting to see if they correct the worksheet.

Did they ever change the form or respond to your comment? Just curious as I recently had a somewhat similar issue with a very poorly worded (at least with regard to intention) in a Gov document. The intention part was revealed after discussion....."we do it that way because..."

 

Did they ever change the form or respond to your comment? Just curious as I recently had a somewhat similar issue with a very poorly worded (at least with regard to intention) in a Gov document. The intention part was revealed after discussion....."we do it that way because..."

As a matter of fact, they did. I just checked and it appears they've corrected it. I haven't looked with a fine-toothed comb yet, but it looks correct at a quick glance.