Tax Forms which Will Be Necessary for Reporting Rental Income and Expenses

As a law abiding property owner, to thoroughly record and report your annual rental funds to the Revenue Service, you must have different Internal Revenue Service tax documents which you’ll find layed out inside of this brief article. As laid out just below, the tax documents considered necessary change depending on the sort of official organization which manages the rental property (individual, partnership, corporation, or LLC). View the article entitled Best Rental Property Ownership, included inside this Guide, for additional info about legal entity rental property ownership.

TIP: Each of the documents discussed below are available on the Internal Revenue Service’s website, at: If you’re using tax preparing programs, it will have all of the necessary forms.

Individual Ownership

Which includes shared property ownership with a significant other, tenancy in common, or mutual tenancy with right of survivorship.

Form 1040. First and foremost, you will have Form 1040, the document filled out by all independent taxpayers. On line 17 of the first page of Form 1040 will be your total rental profit or financial loss, subject to taxes. You will not be able to take advantage of the simple Forms 1040A or 1040-EZ, as a property manager with rental income and expenses.

Schedule E. Schedule E is a certain addendum to Form 1040. Of this addendum’s assorted usages, the purpose of reporting leasing profit and expenses is applicable to yourself. The section of Schedule E labeled as “Part 1” will be the single part you have to fill in. A few relevant tips to keep in mind: if you own the rental mutually with another person who isn’t your spouse, report about the profit you gained along with the expenditures that you sustained. Also, do not forget that if you rented for just a portion of the entire year, or you were renting a section of your personal property, you’ll need to keep track of your expenditures concerning rental and non-rental use. To get more advice, check out Tax Deductible Rental Property Expenses, the article collection which is provided inside this Guide.

Form 4562. On line 18 of Schedule E, you will deduct the depreciation of your rental, which you’ll use Form 4562 to calculate. For more advice, look at the article titled, Depreciation Expenses for Rental Property, which is included in this Guide.

Partnership/Corporate Ownership

Such as a general or limited partnership, or S corporation.

Form 1065/1120-S. The form a joint venture uses to report each of its company operations is Form 1065, that you must use when you have a partnership. Form 1120-S is utilized by an S corporation to report company operations. The total rental profit or deficit are going to be reported on Schedule K, line 2 of Form 1065 or 1120-S (Schedule K is embedded within those forms).

Form 8825. Form 8825 is for partnerships and S corporations, but works similar to Schedule E. Schedule E and Form 8852 are essentially similar. Make sure to report whole sums of any profits and expenses accrued by the partnership or corporation (In the future, they will be allocated to each investor or partner).

Schedule K-1. The total leasing earnings or financial loss due to each investor or partner is reported by this tax document, as outlined by the ownership interest of each shareholder or business partner. The information of the K-1 received by each individual partner needs to be reported on his or her Form 1040, Schedule E, Part II.

LLC Ownership

You can file just like you are an individual property owner considering that, for income tax uses, a single-member LLC is really a disregarded entity (look above). A multiple-member LLC might choose to be taxed as a partnership or as an S corporation (see above).

Huddleston CPA +John Huddleston 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.

Seattle CPAsAbout Seattle CPAs
Seattle CPA+John Huddleston has written extensively on tax related subjects of interest to small business owners. Since 2002, he has been the owner of his own small business, Huddleston Tax CPAs. He is a graduate of Washington State University and the University of Washington School of Law.

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