If you're self-employed, you can claim depreciation, an expense deduction that allows you, over a period of years, to charge off your capital investments in equipment, machines, fixtures, vehicles, buildings, as well as certain intangible property like copyrights, patents, and computer software. In order to take the depreciation deduction you must own the property, use it in business or as an income-producing activity, and have a useful life of more than one year. To claim depreciation for most purchases, use Form 4562. You calculate the depreciation of a certain asset over a period of years and then take the deduction annually. As an alternative, in some cases you may take a one-time, lump-sum deduction in the year that you acquire the property. These notes are meant to be a general guide to federal income taxes. If you need specific advice, please consult a tax advisor or call the toll-free number for Federal Tax Information and Assistance at 1-800-829-1040.
