Form IL-4562

What Is Form IL-4562?

Form IL-4562, often referred to as the Special Depreciation, is a tax document used by Illinois taxpayers to claim additional depreciation for certain property. It provides the means to report the special depreciation allowance and Illinois modifications to federal depreciation. The form is also a tool to capture information regarding any qualified property subjected to different state and federal rules, ensuring taxpayers receive the benefits they are entitled to under the state tax code.

Eligibility and requirements

Before diving into the complexities of the form, it's important to understand who should use it. Form IL-4562 is applicable to any taxpayer who must adjust the basis of assets for Illinois tax purposes due to differences in state and federal depreciation rules.

Taxpayers owning qualified property—such as business equipment or vehicles—placed in service during the tax year and looking to claim the Illinois special depreciation must file this form alongside their regular tax return.

How to Fill Out the Form IL 4562 

Filling out this Illinois form can seem daunting, but breaking down the process step by step and following form IL 4562 instructions simplifies the task:

1. Start with inputting your name as it appears on your tax return, your federal employer identification number (FEIN), or your social security number (SSN) if a FEIN does not apply to you.
2. SFigure out your Illinois special depreciation addition by entering the total amount claimed as a special depreciation allowance on your current federal Form 4562 Depreciation and Amortization, Lines 14 and 25, for property acquired after September 10, 2001. 
3. Individuals only should also enter the total amount claimed as a special depreciation allowance from federal Form 2106, Employee Business Expenses.
4. Figure out your Illinois special depreciation subtraction by entering the portion of depreciation allowance claimed on federal Form 4562, Lines 7, 11, 12, and 14, for each property.
5. Calculate your Illinois depreciation subtraction by entering the total amount of all Illinois depreciation subtractions claimed on this year and any prior year Forms IL-4562, Step 3, for each property.
6. Add up your Illinois special depreciation addition and your Illinois depreciation subtraction to get your Illinois depreciation subtraction for this year.
7. Remember to report your Illinois depreciation subtraction on the appropriate line of your Illinois income or replacement tax return.

Maximizing deductions with accuracy

Efficiently completing IL form 4562 can lead to significant tax savings. Maximizing your depreciation deductions lowers your taxable income and, consequently, your tax liability. It's crucial, however, to maintain accuracy to avoid any issues with the Illinois Department of Revenue. Missing information or inaccuracies can result in delays or audits, creating more hassle and potentially higher tax bills in the long run.