IRS Form 4562: How NRIs Report Depreciation and Amortization

When you purchase certain business or income-producing property, the IRS generally does not allow you to deduct the entire cost immediately. Instead, you may recover the property's cost or other tax basis over a prescribed period through depreciation. IRS Form 4562 is used to report depreciation, amortization, certain Section 179 deductions, and information about certain listed property.

Considering this, Form 4562 can apply when an NRI or other U.S. taxpayer claims depreciation or amortization, makes a Section 179 election, or reports certain listed property. For NRIs, common situations may include owning U.S. rental property, operating a U.S. business, or being a U.S. taxpayer with qualifying foreign business or rental assets.

For NRIs, Form 4562 is relevant only when the underlying property or activity falls within the U.S. tax rules that allow depreciation or amortization. For example, an NRI who owns U.S. rental property and properly reports the rental activity for U.S. tax purposes may need Form 4562 to calculate depreciation. U.S. citizens and resident aliens may also use Form 4562 for qualifying foreign business or rental property because they generally report worldwide income.

Want to know more about IRS Form 4562? Then you are on the right page. This blog provides complete information about the form and how you can reduce your US tax obligations through it.

What Is IRS Form 4562?

Form 4562: Depreciation and Amortization is an IRS form that helps businesses claim tax deductions on purchased assets. Additionally, under section 179, the form is used to report certain property expenses and how business vehicles and other assets are used.

In simple terms, IRS Form 4562 helps you deduct a portion of your assets' cost over their estimated useful life every year. This deduction also helps you reduce your US tax obligations and offset your initial investment. Confused?

Think of it like you own a business asset or rental property that, due to wear and tear, loses its value every year, and it allows you to deduct a portion of that decline. With it, you can save thousands of dollars on your tax obligations.

This was all about IRS Form 4562. Moving ahead, let's know What's New in Form 4562.

What's New for 2025-2026?

The depreciation rules changed significantly following the One Big Beautiful Bill Act (OBBBA), enacted in July 2025. For qualifying property acquired and placed in service after January 19, 2025, the law generally provides a permanent 100% additional first-year depreciation deduction, subject to eligibility requirements. Certain taxpayers may elect a lower percentage in the first tax year ending after January 19, 2025.

The Section 179 limits also increased. For 2026, the maximum Section 179 deduction is $2,560,000, with the phaseout beginning when the cost of Section 179 property placed in service exceeds $4,090,000.

For NRIs, however, the location and use of the property remain important. Property used predominantly outside the United States can be subject to ADS and may not qualify for certain accelerated depreciation provisions. Therefore, foreign property should not automatically be treated the same way as comparable U.S. property.

When Is Form 4562 Applicable for NRIs?

IRS Form 4562 for NRIs is applicable in the following situations:

• If you own a rental property in the US
• Operate a business in the US and bought vehicles, equipment, or other eligible assets for business
• Opt for Section 179 under the IRS and immediately write off an asset under it.
• On eligible property, claim bonus depreciation.
• Amortize certain intangible assets connected to a U.S. business, such as certain loan fees or the acquisition cost of a patent.

So, these were some situations where IRS Form 4562 applies to NRIs. Moving further, let's know the assets that are eligible to be reported on Form 4562.

What Assets Can Be Reported on Form 4562?

The assets that qualify to be reported on Form 4562 include:

Business Equipment

Business equipment, including machinery, furniture, computers, and other tangible assets that are part of a U.S. business, qualifies to claim depreciation under Form 4562. Additionally, these assets are also eligible for deduction and bonus depreciation under section 179 of the IRS.

Rental Property Assets

Rental property depreciation includes the building, not the land, along with certain major improvements, such as installing an HVAC system or building a new roof. Additionally, if the property is furnished, it also involves purchasing new furniture or appliances. Further, for non-resident aliens, it is the most relevant depreciation category.

Amortization of Intangible Assets

Form 4562 can be used to report amortization for certain qualifying intangible costs, including certain acquired Section 197 intangibles, startup costs, organizational costs, and other qualifying expenditures. The applicable amortization period depends on the type of cost.

These are the assets reported on IRS Form 4562. Moving forward, let's know who should file this form.

Who Must File Form 4562?

You should file Form 4562 with your tax return (Form 1040/ 1040-NR) if you are claiming any of the below-mentioned things:

• Claiming depreciation on the asset or property you started using in business during the current financial year.
• For qualifying business property using tax deduction under section 179.
• Reporting vehicles or other "listed property" on Form 4562. This includes cars, computers, and other items used for both personal and business purposes.
• Claiming depreciation on your overseas rental properties.
• Amortization of intangible assets.

Further, if you are calculating depreciation on an already depreciating asset in prior years and have no new assets, listed property, or elections, you do not need to fill out the form again.

So, this was all about who should file Form 4562. Now, moving ahead, let's know what the Section 179 deduction is.

What Is Section 179 Deduction?

Section 179 of the IRS allows businesses to take an immediate expense of up to $2,560,000 instead of claiming depreciation for qualifying equipment for the current tax year, i.e., 2026. Considering this, the following tax deduction starts to phase out once the cost of purchased equipment is more than $4,090,000.

However, this section does not apply to overseas property used by the taxpayer predominantly, i.e., more than 50%. This means if you purchase a laptop or equipment for your business in Thailand, you cannot claim the expense immediately on these items under section 179. Here, the asset was located outside the US, and used predominantly outside the country. So you need to use the depreciation method by reporting these assets on Form 4562.

There is also an exception available under section 179. If you are a U.S. taxpayer who occasionally works overseas but primarily uses your equipment in the US or buys equipment that will be used within the country, you can claim immediate expenses under section 179.

This was all about Section 179 deductions. Moving further, let's know who to fill out Form 4562.

How to Fill Out Form 4562?

Here are the steps to fill out IRS tax Form 4562:

Information Required

Before filling out the form, gather the following information:

• Purchase date, cost, and description of each asset for which you are claiming depreciation.
• Mention the date when you "placed in service" the asset (included it in business or rental property). This date is very important because it helps determine depreciation, apply the rules accordingly, and calculate the bonus depreciation rate.
• For calculating depreciation on rental property, you need to compare the land and building value, since depreciation is only available on the building.
• The percentage of an asset you are using for business if you used the asset for both personal and business purposes.

Process to Fill Form 4562

The IRS Form 4562 consists of six parts, though you only need to fill out sections that are relevant to your tax situation.

• Part I: If applicable, choose and calculate your immediate expenses under section 179. Generally, due to foreign use restrictions (more than 50%), this option is rarely available for US taxpayers.
• Part II: For qualifying property acquired and placed in service after January 19, 2025, the OBBBA generally provides a permanent 100% additional first-year depreciation deduction, subject to the property's eligibility requirements.
• Part III: Work through the standard Modified Accelerated Cost Recovery System (MACRS) depreciation. It is a standard method for spreading tax deductions over the useful life of the asset for property that is not fully covered under section 179 or bonus depreciation. Additionally, this is a place where US taxpayers with rental property in a foreign country report depreciation using the Alternative Depreciation System (ADS). Under this, you need to mention the properties you held, the cost (excluding land), the recovery period (it includes 30 years for residential property and 40 years for commercial property), and calculate your annual tax deduction.
• Part IV: This includes your whole depreciation deduction for the year.
• Part V: In this part, report "listed property" like a computer or a car as per the percentage you use them for business.
• Part VI: Under this part, calculate and report amortization in Form 4562 for qualifying intangible assets like startup costs of business or patents.

Forms Filed Along With Form 4562

As per your tax situation in the US, along with IRS Form 4562, you may need to fill out the following forms:

• Form 4797: When depreciable business property is sold, depreciation deductions can affect the property's adjusted basis and may result in depreciation recapture. Form 4797 is generally used to report the sale of business property and related gain or loss.
• Form 8582: Form 8582 may apply when passive activity loss rules limit rental losses. Form 6198 may also be relevant when the at-risk rules limit the amount of loss you can claim.
• Form 6252: If you sell qualifying property using the installment method and receive payments after the year of sale, Form 6252 may be required to report the installment sale income.
• Form 3800: Form 3800 is Used to claim and calculate allowable general business credits. It is not a depreciation form and is required only when the taxpayer is claiming applicable general business credits.

This is how you should fill out IRS Form 4562. Moving ahead, let's know the due date for filing this form.

Due Date for Filing Form 4562

The due date for filing Form 4562 is the same as your US tax return, i.e., April 15, with an automatic extension available to June 15 if you live outside the country. Additionally, you can also request an extension till October 15 from the IRS.

Considering this, you need to fill out Form 4562 along with your US tax return. There is no standalone due date. Now, moving ahead, let's know the common mistakes to avoid when filing out Form 4562.

Common Filing Mistakes to Avoid When Filing Form 4562

You should avoid the following mistakes when filing out IRS Form 4562:

• When calculating depreciation on a building, including the value of the land. As mentioned earlier, under Form 4562, depreciation on land is not available. So, when applying depreciation on a building, subtract the land value.
• Applying the wrong depreciation system made by most US taxpayers. For US properties, you need to use the General Depreciation System, and for foreign rental properties, you need to use ADS.
• Claiming immediate expense under section 179 on foreign business equipment. This section does not apply to property used outside the US.
• Not converting the currency. All amounts you mentioned in the Form 4562 should be in US dollars.
• Not keeping proper records. Maintain proper records of asset purchase dates, prices, the percentage of the asset you used in business, and schedule depreciation. This is vital because, even years later, the IRS can audit your claimed depreciation.
• Forgetting to mention the "placed in service" date requirement. Depreciation only starts when your property is available for rental or business use, not when you purchased it.
• Not filing Form 4562 in the first year of claiming depreciation. Forgetting this step creates difficulties in scheduling your depreciation in future years.
• Not considering that applying depreciation impacts your future asset sale. Every amount you claim as depreciation on your asset directly reduces its value. This further increases your capital gain.

These are the common mistakes you should avoid when filing Form 4562.

Final Thoughts

Lastly, IRS Form 4562 only applies when you run a business abroad, own a rental property overseas, or buy equipment (laptop or machinery) for your freelance work. Additionally, it is also available for NRIs if they have rental property in the US. Through this form you can simply claim depreciation on your assets used in business and reduce your tax obligations.

Further, calculating depreciation is not an easy task, especially when you are dealing with foreign property, calculating the recovery period of the property, and doing currency conversion. Also, small mistakes in it can lead to under- or overpayment of taxes. At Savetaxs, we can help you handle Form 4562 and increase your tax savings. So connect with us and plan your US taxes without any issues.