This week (and probably part of this weekend) I'll be wrapping up my Tax Year 2014 activities. As always, there will be much celebration afterwards.
Since 2009 I've used H&R Block® Online Tax Software every year I've been able. In tax years 2012 and 2013, I had an investment vehicle unusual enough that the interview software wasn't able to navigate through it, so some of the streamlining that I might have achieved had I used it every year was lost.
Appreciation for depreciation
Now that the complicated investment vehicle was out of my hands, I went back to using the software.
In the preceding two years, I had figured out the depreciation of some assets for my rental property by hand. I searched around online and found a calculator that seemed to be giving me the correct numbers. It's here.
The two depreciable assets that go back the farthest are the house and the dishwasher. They've both been in service almost five years. The dishwasher is almost completely depreciated; next year will be the last year.
So, I plug numbers in the calculator: $314 depreciable part, 5-year useful life, half-year convention. And I got these numbers:
| 2010 | $63 |
| 2011 | $100 |
| 2012 | $60 |
| 2013 | $36 |
| 2014 | $22 |
| 2015 | $7 |
So, according to the calculator, my depreciation for tax year 2014 is $22.
I had trusted this calculator for Tax Year 2012 and 2013 because it gave numbers that agreed with what H&R Block Online had calculated for 2010 and 2011.
And, as it turns out, the calculator had given me the correct numbers for 2012 and 2013. More on that in a minute.
But after entering the information into H&R Block® Online it told me that my depreciation for 2014 would be $36.
Wait, that's last year's amount! I was thinking. This year should be $22!
So, I tried all kinds of changes to get H&R Block's software to spit out $22 like I thought it should. Maybe I was misinterpreting what information it was asking for. Stubbornly, though, it didn't ever give me $22 for my answer. Even after a couple of hours of banging my head on the table.
I neglected to consult the #1 source of tax information
I received an answer to my question on the Personal Finance and Money Stack Exchange site from FireJava:
[S]econd column doesn't equal 1.0. Year 2014 should be 0.1152 of 314. Yes, year 4 and 5 will have same depreciation expense amounts.
Tax Year % Amount Amount of Depreciation 2010 20.00% 314 63 2011 32.00% 314 100 2012 19.20% 314 60 2013 11.52% 314 36 2014 11.52% 314 36 2015 05.76% 314 18 You can find the table in the Publication 946 from IRS. I hope this helps.
That will teach me to forget the #1 source for (United States) tax information: The IRS. As they say, “The buck stops here.” For real.
H&R Block Online arrived at exactly the right answer: The IRS's answer.
Now, on to the rest of my taxes.
