Depreciation and Bonus Depreciation for Self-Employed Taxpayers
In short: Depreciation spreads the cost of business assets lasting over a year across their useful life, while bonus depreciation lets you write off a large share in year one.
How Asset Depreciation Works for 1099 Workers
When you purchase business assets that last longer than one year, such as office furniture, laptops, or tools, tax rules generally require you to recover that cost over several years rather than taking a single lump-sum expense. Most of these assets use MACRS recovery periods defined by the IRS to determine the annual deduction amount. You calculate these yearly deductions using IRS Pub 946 guidelines. The final calculated figure is reported on Form 4562 and then carried over to line 13 of your Schedule C to lower your overall taxable business income for the year.
Accelerating Deductions With Bonus Depreciation
Waiting years to fully recover the cost of equipment can strain cash flow for independent contractors and freelancers. To help mitigate this, bonus depreciation allows you to deduct a massive percentage of an eligible asset's cost in the very first year it is placed in service. Under current rules, including permanent updates from OBBBA (2025), qualifying property acquired and placed in service after January 19, 2025, qualifies for 100 percent bonus depreciation. This mechanism essentially eliminates the wait for multi-year MACRS recovery schedules on eligible business purchases.
Qualifying Property and Recordkeeping
To utilize bonus depreciation or standard MACRS recovery, the asset must be used predominantly for business purposes and expected to last more than a single year. Common qualifying items include machinery, computers, office gear, and certain vehicles used in your operations. Maintaining clean records of purchase receipts, dates of service, and business use percentages is vital. Proofly helps self-employed workers photograph and organize these exact expense receipts so that all necessary purchase details are easily accessible when it comes time to report asset information.
Related
What the Proofly receipt scanner does — and doesn’t
Does
- Reads merchant, date, line items, tax and payment method from a photo, with a confidence meter so you can correct it before saving
- Keeps personal and per-company receipts separate
- Maps business expenses to Schedule C lines (meals already at 50%)
- Exports an audit pack: every receipt image plus a ledger, as PDF, and CSV for QuickBooks or Xero
- Has a manual mileage log priced at the IRS rate for each trip’s date
Doesn’t
- File your taxes or give tax advice
- Sync live with QuickBooks or Xero (it’s CSV export)
- Pull transactions from your bank automatically
- Track your drives by GPS
- Guarantee how an audit turns out
Frequently asked questions
What is the difference between depreciation and Section 179?
Both methods let you deduct the cost of business assets, but Section 179 is an explicit election to expense up to a specific limit immediately, whereas bonus depreciation can cover remaining balances or automatically write off eligible property at high percentages.
Where do I report depreciation on my tax return?
You must figure your depreciation calculations on IRS Form 4562 and then carry that final deductible amount over to line 13 of your Schedule C.
What is the bonus depreciation percentage for qualifying property?
For qualifying property acquired and placed in service after January 19, 2025, the bonus depreciation percentage is 100 percent permanently under OBBBA (2025) guidelines.
Which IRS publication covers depreciation rules?
IRS Pub 946 is the primary reference manual that explains how to figure depreciation, choose recovery periods, and handle asset write-offs.
Sources
This guide summarizes IRS guidance as of October 28, 2026 for planning purposes. It isn’t tax advice — confirm your situation with IRS.gov or a qualified tax professional.