Tax Documents that Will Be Important for Reporting Rental Income

For a landlord, to correctly account for and report your rental profit to the IRS, you need various IRS tax forms that are layed out in this brief article. As is detailed in the next paragraphs, the tax forms called for will vary depending upon the type of official company who manages the rental home (individual, partnership, corporation, or LLC). For more details on the subject of legal entity property ownership, find the article included in this Guide, entitled Best Rental Property Ownership.

Quick Tip: You will find the various documents mentioned here on the Revenue Service’s website: http://www.irs.gov/Forms-&-Pubs. If you’re using tax prep software, the application should have the appropriate forms.

Individual Ownership

Which includes joint rental property ownership with a husband or wife, tenancy in common, or mutual tenancy with legal rights of survivorship.

Form 1040. Initially, you will need Form 1040, the form filled out by all independent taxpayers. At line 17 of the first page of Form 1040 is the net rental profit or loss, subject to tax. Please note that as a good property manager with rental income and expenses, you’re not able to work with the simplified Forms 1040A or 1040-EZ.

Schedule E. Schedule E is one addendum to Form 1040. It has several functions, but the application that is applicable to your needs is reporting of rental property revenue and costs. The single element of Schedule E that you have to finish is the section entitled “Part I”. A few critical notes to be aware of: if reporting on a rental property which you mutually own with anyone, who isn’t your significant other, you will only need to report the costs you suffered and the profit you collected. Try to remember, additionally, that you will need to distribute costs between rental and non-rental purposes when you are leasing a segment of your house, or if you only leased for a portion of the entire year. To get more tips, look at Tax Deductible Rental Property Expenses, the article series which is included in this Guide.

Form 4562. On line 18 of Schedule E, you will deduct the depreciation on the rental property, which you must employ Form 4562 to figure out. For further info, find the article entitled, Depreciation Expenses for Rental Property, which is provided in this Guide.

Partnership/Corporate Ownership

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

Form 1065/1120-S. For people with a joint venture, you must fill out Form 1065, the form a collaboration uses to report everyone of its business operations. Form 1120-S is employed by an S corporation to report business operations. Your current total leasing profit or losses should be reported on Schedule K, line 2 of Form 1065 or 1120-S (Schedule K is embedded in the documents).

Form 8825. Form 8825 is made for partnerships and S corporations, and works similar to Schedule E. Schedule E and Form 8852 are fundamentally quite similar. Be sure to include whole sums of any profits and costs accrued by the partnership or corporation (Later, these will be divided among each shareholder or partner).

Schedule K-1. This document reports the total leasing profits or losses due to each business partner or investor as outlined by that partner or shareholder’s property ownership interest. Each business partner receives their own K-1 and must report the details of the K-1 on his or her Form 1040, Schedule E, Part II.

Limited Liability Company Ownership

You may file as though you were an individual property owner since, for taxation requirements, a single-member LLC is actually a disregarded entity (see above). A multiple-member LLC might choose to be taxed as a partnership or as an S corporation (look above).

Seattle 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.