Form IL-4562, officially titled “Special Depreciation,” is a supplemental Illinois tax form used to adjust your state income based on differences between federal and Illinois depreciation deductions. It is filed by individuals, corporations, partnerships, trusts, and estates that claim special or bonus depreciation on their federal tax returns.
At the federal level, taxpayers often benefit from accelerated or “bonus” depreciation under IRS Form 4562 (Depreciation and Amortization). However, Illinois does not fully conform to all federal depreciation allowances. Therefore, Form IL-4562 ensures that Illinois taxpayers add back certain bonus depreciation amounts to Illinois income in the year claimed and later subtract those same amounts when regular depreciation resumes.
This form is mandatory if you claim a special depreciation allowance for property acquired after September 10, 2001, or if you have prior-year depreciation adjustments. It is authorized under the Illinois Income Tax Act, and failure to file it properly can lead to penalties or incorrect taxable income calculations. You must attach it to your Illinois income tax return (IL-1120, IL-1120-ST, IL-1065, IL-1041, or IL-1040).
How To File Form IL-4562
- Download the Form: Access it from the Illinois Department of Revenue’s website or complete it through your tax preparation software.
- Attach It: Include Form IL-4562 with your Illinois return for the same year (individual, corporate, partnership, trust, or estate).
- Complete All Steps: Follow Step 1 through Step 3 as explained below.
- Do Not Use Negative Figures: All entries must be positive; the form adjusts additions and subtractions automatically.
- File by the Deadline: Submit it with your regular state income tax return by the due date applicable to your entity.
How to Complete Form IL-4562
Header Section
- Year Ending: Enter the month and year of your tax year’s end.
- Name and Identification: Provide your name (as it appears on your main return) and your Social Security Number (SSN) or Federal Employer Identification Number (FEIN).
- Attach To: IL-1120, IL-1120-ST, IL-1065, IL-1041, or IL-1040, as appropriate.
Step 1: Provide the Following Information
- Enter your name exactly as shown on your return.
- Enter your SSN or FEIN.
- Read all instructions before completing the form. Negative amounts are not allowed.
Step 2: Figure Your Illinois Special Depreciation Addition
This section calculates how much federal special (bonus) depreciation you must add back to Illinois income.
Line 1:
Enter the total special depreciation allowance claimed on federal Form 4562, Lines 14 and 25, for property acquired after September 10, 2001.
Line 2:
For individuals only – enter the special depreciation allowance claimed on federal Form 2106 (Employee Business Expenses).
Line 3:
For the last year of regular depreciation, enter the total of all Illinois depreciation subtractions claimed in this and any prior year Forms IL-4562, Step 3. (See the form’s instructions for details on prior-year property.)
Line 4:
Add Lines 1 through 3. This total is your Illinois special depreciation addition. Report this on the Illinois form and line indicated in the official instructions (depends on your return type).
Step 3: Figure Your Illinois Special Depreciation Subtraction
This section determines the depreciation you may now subtract from Illinois income as your property continues to depreciate.
Lines 5a – 6:
All marked “RESERVED.” Leave blank.
Line 7a:
Enter the portion of federal depreciation for property where you claimed 30 percent bonus depreciation.
Line 7b:
Individuals only – enter the portion related to 30 percent bonus depreciation.
Line 7c:
Add Lines 7a and 7b.
Line 8:
Multiply Line 7c by 42.9 percent (0.429).
Line 9a:
Enter the portion of depreciation for property with 40 percent bonus depreciation (see official instructions for specifics).
Line 9b:
Individuals only – enter the corresponding portion for 40 percent bonus depreciation.
Line 9c:
Add Lines 9a and 9b.
Line 10:
Multiply Line 9c by 66.7 percent (0.667).
Line 11a:
Enter the portion of depreciation for property with 50 percent bonus depreciation.
Line 11b:
Individuals only – enter the same for 50 percent bonus depreciation.
Line 11c:
Add Lines 11a and 11b.
Line 12a:
Enter the portion of depreciation for property with 60 percent bonus depreciation.
Line 12b:
Individuals only – enter the same for 60 percent bonus depreciation.
Line 12c:
Add Lines 12a and 12b.
Line 13:
Multiply Line 12c by 1.5 (150 percent).
Line 14a:
Enter the portion of depreciation for property with 80 percent bonus depreciation.
Line 14b:
Individuals only – enter the same for 80 percent bonus depreciation.
Line 14c:
Add Lines 14a and 14b.
Line 15:
Multiply Line 14c by 4 (four times).
Line 16:
Enter the amount of federal depreciation you would have claimed had you not elected to take bonus depreciation. (Refer to the form’s official instructions for detailed calculation guidance.)
Line 17:
Add Lines 8, 10, 11c, 13, 15, and 16.
Line 18:
For the last year of regular depreciation, enter the Illinois special depreciation addition reported on any prior-year Form IL-4562 Step 2, Lines 1 + 2 for each property. (See official instructions.)
Line 19:
Add Lines 17 and 18. This total is your Illinois depreciation subtraction for this year. Report it on the proper Illinois form and line number specified in the instructions.
Authorization and Disclosure
At the bottom of the form, the Illinois Department of Revenue notes:
“This form is authorized as outlined by the Illinois Income Tax Act. Disclosure of this information is required. Failure to provide information could result in a penalty.”
The form is electronic-only and should be attached to your Illinois income tax filing as Attachment No. 11.