Necessary Tax Forms for the Purpose of Reporting Leasing Income

For a property manager, to accurately account for and report your own rental property income to the IRS, you’ll need multiple Internal Revenue Service tax documents that are described in this short article. According to the sort of authorized company who manages the rental, the tax documents needed will vary, as is laid out here (individual, partnership, corporation, or LLC). Find the article titled Best Rental Property Ownership, included within this Guide, for further information concerning legal entity rental property ownership.

TIP:  You will discover all of the documents discussed in this article on the IRS’s homepage: http://www.irs.gov/Forms-&-Pubs. When you use tax prep programs, the application has each of the needed documents.

Individual Ownership

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

Form 1040. All independent tax payers have to submit Form 1040, and this is the place you will have to get started. Your annual total rental profits or deficit subjected to taxation will be on line 17 in the very first page in Form 1040. Note that as a landlord with rental property income and expenses, you aren’t able to utilize the simplified Forms 1040A or 1040-EZ.

Schedule E. A certain addendum to Form 1040 that you ought to find out about is Schedule E. Of this addendum’s numerous applications, the usage of reporting rental property profit and expenses is useful to your needs. The part of Schedule E marked as “Part 1” will be the one portion you must fill out. There are important tips you should be aware of, including: if reporting on the rental property that you mutually own with another person, who is not your significant other, you only have to report the costs you accrued and the profits which you gained. Furthermore, remember if you leased just for a portion of the calendar year, or if you are actually renting part of your own private property, you’ll need to distribute costs relating to rental and non-rental purposes. For more information, take a look at Tax Deductible Rental Property Expenses, the article set which is provided with this Guide.

Form 4562. Form 4562 is used to determine depreciation on your rental property, which you’ll want to deduct at line 18 of Schedule E. For more info, see the article called, Depreciation Expenses for Rental Property, that is provided in this Guide.

Partnership/Corporate Ownership

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

Form 1065/1120-S. For people with a partnership, you have to use Form 1065, the form a joint venture uses to report all its enterprise operations. An S corporation utilizes Form 1120-S to report its enterprise activities. Your current total rental property profit or losses are going to be reported on Schedule K, line 2 of Form 1065 or 1120-S (These forms are integrated with Schedule K).

Form 8825. Form 8825 is for partnerships and S corporations, but acts just like Schedule E. Schedule E and Form 8852 are basically very similar. Be sure that all earnings and costs suffered by the corporation or partnership are included in their whole sums (these are allocated to each partner or shareholder later).

Schedule K-1. This tax document reports the net rental income or deficit due to each partner or shareholder in line with that partner or investor’s ownership interest. The contents of the K-1 given to every partner needs to be reported on her / his Form 1040, Schedule E, Part II.

Limited Liability Co-ownership

A one member limited liability company is really a disregarded entity for income tax objectives, meaning you can file just like you are an individual property owner (look above). A multiple-member LLC might choose to be taxed as either a partnership or as an S corporation (see 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.

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