Mandatory Tax Documents for Reporting Rental Property Income

As a law abiding property owner, to thoroughly account for and report your annual rental property income to the Revenue Service, you’ll need multiple Internal Revenue Service tax forms which you’ll find highlighted within this short article. As laid out just below, the tax forms called for will be different, depending upon the particular official organization which owns the property (individual, partnership, corporation, or LLC). Find the article entitled Best Rental Property Ownership, provided with this Guide, for further information on legal entity rental property ownership.

Quick Tip: You can locate the various forms outlined directly below on the IRS’s website: http://www.irs.gov/Forms-&-Pubs. If you have tax prep software programs, it contains all the appropriate forms.

Individual Ownership

Including shared property ownership with a wife or husband, tenancy in common, or joint tenancy with rights of survivorship.

Form 1040. First and foremost, you’ll need Form 1040, the tax form filed by all independent tax payers. Found on line 17 of the first page of Form 1040 will be the total rental property income or financial loss, subjected to tax. Take note that as a good property owner with leasing activity, you will not be permitted to utilize the simple Forms 1040A or 1040-EZ.

Schedule E. Schedule E is a certain addendum of Form 1040. There are numerous uses, though the function relevant to your needs is reporting of rental profits and costs. The part of Schedule E titled “Part 1” will be the only segment you must fill in. A handful of fundamental notes to be aware of: if you ever own the rental mutually with anyone other than your significant other, report about the profits which you received as well as the costs you suffered. On top of that, bear in mind if you leased just for a portion of the year, or if you are actually leasing a part of your personal house, you have to keep track of your expenditures regarding rental and non-rental usage. View the compilation of articles entitled Tax Deductible Rental Property Expenses, contained with this Guide, for further information.

Form 4562. Form 4562 is used to determine depreciation on the rental property, which you can deduct at line 18 of Schedule E. Read the article called Depreciation Expenses for Rental Property, in this Guide, for more advice.

Partnership/Corporate Ownership

For example a general or limited partnership or S corporation.

Form 1065/1120-S. The document a partnership uses to report every one of its organization operations is Form 1065, which you have got to use if you have a partnership. An S corporation utilizes Form 1120-S to report its organization operations. Schedule K, line 2 of Form 1065 or 1120-S is where your own net leasing loss or income are going to be reported (Such forms are incorporated with Schedule K).

Form 8825. Form 8825 is for partnerships and S corporations, and it acts like Schedule E. It is actually essentially a lot like Schedule E. Be sure that all revenue and costs accrued by the corporation or partnership are recorded in their complete sums (they are allotted to each partner or shareholder in the future).

Schedule K-1. The total rental property revenue or loss as a result of each shareholder or partner is reported by this document, according to the rental property ownership interest of the shareholder or business partner. Each individual business partner is provided with his or her own K-1 and is going to report the elements of that K-1 on her or his Form 1040, Schedule E, Part II.

Limited Liability Co-ownership

A one member limited liability company is a disregarded entity for tax purposes, meaning you’ll be able to file like you’re an independent property owner (notice above). A multiple-member LLC has the option to be taxed either as a partnership or as an S corporation (notice above).

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

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