Form 4562: Depreciation and Amortization for H-1B Households

Form 4562 reports depreciation and amortization deductions for business assets. This guide explains when H-1B households need this form, how Section 179 expensing works, and the interaction with Schedule C, Schedule E, and Form 8829.

What Is Form 4562?

Form 4562, "Depreciation and Amortization," reports the cost recovery of tangible property (equipment, vehicles, furniture) and intangible assets (patents, software) used in a trade or business or for producing income. Depreciation spreads the cost of an asset over its useful life rather than deducting the full cost in the year of purchase.

When H-1B Households Need Form 4562

• H-4 EAD self-employment: If your spouse purchased a computer, camera, specialized equipment, or software for their freelance business, those assets are depreciated on Form 4562 and deducted on Schedule C.
• Rental property: If you own rental property (in the U.S. or India), the building itself and major improvements are depreciated. Residential rental property uses a 27.5-year straight-line method (30 years for property placed in service after 2017 under TCJA modifications).
• Home office depreciation: The business-use portion of your home is depreciated on Form 8829, but the depreciation calculation references Form 4562 conventions.
• K-1 Section 179: If you receive a K-1 from a partnership that passes through a Section 179 deduction (Box 12), Form 4562 is required.

Section 179 Expensing

Section 179 of the IRC allows you to deduct the full cost of qualifying business equipment in the year it is placed in service, rather than depreciating it over several years. For TY2025, the maximum Section 179 deduction is $1,250,000, with a phase-out beginning at $3,130,000 of total property placed in service.

Common Section 179 assets for H-1B households include computers, printers, office furniture, and business vehicles (with limitations for SUVs and luxury vehicles).

Key Sections of Form 4562

• Part I — Section 179 election: Full expensing of qualifying assets in the year placed in service.
• Part II — Bonus depreciation: Additional first-year depreciation (currently phasing down from 100% to 80% for 2023, 60% for 2024, 40% for 2025, 20% for 2026).
• Part III — MACRS depreciation: Standard depreciation using IRS recovery periods (5-year for computers, 7-year for furniture, 27.5-year for residential rental property, 39-year for commercial property).
• Part V — Listed property: Assets that have both personal and business use (vehicles, phones, computers if not exclusively business-use) require detailed usage records.
• Part VI — Amortization: Intangible assets like startup costs, organizational costs, and purchased goodwill (15-year amortization under Section 197).

Indian Rental Property Depreciation

If you own rental property in India and report the income on your U.S. return (Schedule E), you must depreciate the building portion using U.S. depreciation rules — typically 30 years for residential rental property placed in service after 2017. The land is not depreciable. You allocate the purchase price between land and building based on the local property assessment or a professional appraisal.

The depreciation amount is calculated in USD using the INR/USD exchange rate from the year the property was placed in service. Each year's depreciation deduction uses the same original USD cost basis.

Related Resources

• Schedule C: Self-Employment Income
• Form 8829: Home Office Deduction
• Schedule K-1 for H-1B Holders