Rhode Island Bonus Depreciation: Key Rules and Adjustments
Rhode Island does not allow the federal bonus depreciation for state tax purposes. This means that any bonus depreciation claimed on your federal tax return must be added back to your Rhode Island taxable income.
How to Report Bonus Depreciation on Rhode Island Returns
- Added Back to Income: When filing your Rhode Island tax return, you must add back any bonus depreciation taken for federal purposes. This adjustment is made on RI Schedule M, page 2, line 2d.
- Subsequent Year Deduction: In future years, if your federal depreciation is less than what would have been allowed under the bonus depreciation rules, the difference may be deducted from your Rhode Island income. This is reported on RI Schedule M, page 1, line 1i.
- Legal Basis: This rule is based on R.I. Gen. Laws ยง 44-61-1, which disallows the federal bonus depreciation for Rhode Island tax purposes.
Important Notes for Taxpayers
- The Rhode Island tax system requires modifications to federal income to calculate state taxable income.
- Businesses and individuals must adjust their federal depreciation schedules to comply with Rhode Island rules.
- Failure to add back bonus depreciation may result in underreporting of Rhode Island taxable income.
Source:
Form RI-1040 Instructions
Form RI-1040NR Instructions
Disclaimer: Always verify with the official Federal or State Department of Revenue Forms and Instructions for the most accurate and up-to-date tax guidance.