Necessary Tax Documents Concerning Reporting Rental Income

The following brief article is focused on all the IRS tax documents you must have as a landlord to be able to fully record, and report, your rental revenues to the Internal Revenue Service. Based on the particular professional body which possesses the rental, the tax documents required vary, as laid out below (individual, partnership, corporation, or LLC). Look at the page titled Best Rental Property Ownership, provided in this Guide, for more information on the subject of legal entity ownership.

Quick Note: You will discover the various documents discussed in this article on the Internal Revenue Service’s website: The required documents will be found in any tax prep computer software, if you work with one.

Individual Ownership

Joint property ownership with a husband or wife, joint tenancy with right of survivorship, plus tenancy in common would be examples.

Form 1040. Initially, you will need Form 1040, the form used by all independent people. Your current total rental earnings or loss subjected to taxes are at line 17 of the very first page in Form 1040. You will not be permitted to take advantage of simplified Forms 1040A or 1040-EZ, as a good landlord with leasing activity.

Schedule E. Schedule E is one addendum to Form 1040. Of this addendum’s many different applications, just the application of reporting rental income and expenses is important to your needs. The one part of Schedule E that you have to fill out is the portion titled “Part I”. There are several essential tips you should remember, such as: if you happen to own the rental property mutually with someone other than your significant other, report only the profits that you received plus the expenditures that you sustained. Bear in mind, additionally, that you’ll have to allocate costs between rental and non-rental use should you be leasing a part of your personal home, or if you only leased for part of the entire year. Look at the series of articles called Tax Deductible Rental Property Expenses, included in this Guide, for additional info.

Form 4562. At line 18 of Schedule E, you can deduct the depreciation on the property, that you will use Form 4562 to figure out. Read the article entitled Depreciation Expenses for Rental Property, within this Guide, for further tips.

Partnership/Corporate Ownership

A general or limited partnership, or S corporation is an example.

Form 1065/1120-S. For people who have a collaboration, you have to utilize Form 1065, the tax form a partnership utilizes to report all its company activities. An S corporation employs Form 1120-S to report its enterprise activities. Your annual total rental revenue or deficit will be reported on Schedule K, line 2 of Form 1065 or 1120-S (Schedule K is embedded into the documents).

Form 8825. This form functions similar to Schedule E, but for partnerships and S corporations. Schedule E and Form 8852 are basically very much the same. Make sure to disclose whole sums of all revenue and costs sustained by the partnership or corporation (Down the road, these should be allotted to each investor or partner).

Schedule K-1. This tax document reports the net leasing income or financial loss owing to each partner or investor as outlined by that partner or shareholder’s property ownership interest. Each partner should get her / his own personal K-1 and should report the details of that K-1 on her / his Form 1040, Schedule E, Part II.

Limited Liability Company Ownership

You’ll be able to file like you were an independent owner as, for income tax uses, a single-member LLC is really a disregarded entity (see above). A multiple-member LLC has the option to be taxed as either a partnership or as an S corporation (see above).

Auburn 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.

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