Important Tax Forms for the Purpose of Reporting Rental Property Income and Expenses

This valuable article is focused on the many Revenue Service tax documents you’ll need as a landlord in order to fully record, and report, your rental funds to the IRS. As discussed below, the tax forms needed will vary in accordance with the sort of legal business who possesses the rental property (individual, partnership, corporation, or LLC). Read the page called Best Rental Property Ownership, provided inside this Guide, for more information about legal entity property ownership.

TIP: Note – You will find all of the forms covered in the following paragraphs on the Revenue Service’s homepage: http://www.irs.gov/Forms-&-Pubs. The various appropriate forms are going to be contained in any tax preparing software programs, should you use one.

Individual Ownership

Mutual rental property ownership with a partner, mutual tenancy with legal rights of survivorship, along with tenancy in common will be examples.

Form 1040. All individual taxpayers must use Form 1040, and this is exactly where you have to start. In line 17 of the first page of Form 1040 is your net leasing profits or losses, subject to taxation. You aren’t able to utilize the easy Forms 1040A or 1040-EZ, as a good property manager with rental income and expenses.

Schedule E. Schedule E is one addendum of Form 1040. There are various usages, but the function meant for your needs is reporting of rental profits and expenses. The single portion of Schedule E that you should fill out is the portion marked as “Part I”. A few relevant notes to keep in mind: if reporting on a rental that you jointly own with another person, other than your spouse, you only need to report the costs that you suffered plus the income which you earned. Remember, also, that you’ll have to keep track of your expenses relating to rental and non-rental purposes should you be leasing a share of your own private home, or if you leased only for a part of the calendar year. For additional information, take a look at Tax Deductible Rental Property Expenses, the article series which is provided with this Guide.

Form 4562. On line 18 of Schedule E, you’ll be able to deduct the depreciation of your rental property, which you must employ Form 4562 to work out. For additional tips, view the article called, Depreciation Expenses for Rental Property, that’s provided in this Guide.

Partnership/Corporate Ownership

A general or limited partnership, or S corporation is included.

Form 1065/1120-S. For people who have a partnership, you have to use Form 1065, the tax form a joint venture utilizes to report all of its enterprise operations. An S corporation utilizes Form 1120-S to report its company operations. Your annual total leasing profits or loss will be reported on Schedule K, line 2 of Form 1065 or 1120-S (These documents are integrated with Schedule K).

Form 8825. Form 8825 is for partnerships and S corporations, yet works just like Schedule E. Schedule E and Form 8852 are essentially very similar. Ensure that you include whole amounts of any revenue and expenses sustained by the partnership or corporation (these are going to be allotted to each business partner or investor later on).

Schedule K-1. This tax document reports the net leasing profits or deficit owing to each business partner or investor as outlined by that partner or investor’s ownership interest. Every business partner is provided with her or his own personal K-1 and has to report the details of the K-1 on their own Form 1040, Schedule E, Part II.

Limited Liability Company Ownership

You can file like you are an independent property owner on the grounds that, for taxation objectives, a single-member LLC is really a disregarded entity (look above). A multiple-member LLC might choose to be taxed as either a partnership or as an S corporation (look above).

Seattle Accountant has written extensively on tax related subjects of interest to small business owners. He is a graduate of Washington State University and the University of Washington School of Law.

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