Important Tax Forms for Reporting Rental Income

This valuable brief article discusses the assorted Internal Revenue Service tax documents you need as a property manager to be able to completely record, and report, your own rental property earnings to the Revenue Service. Depending upon the particular authorized body which manages the rental home, the tax forms required will change, as detailed in this article (individual, partnership, corporation, or LLC). View the article called Best Rental Property Ownership, found in this Guide, to get more information on the subject of legal entity property ownership.

  • Each of the forms outlined directly below are accessible on the IRS’s webpage. The different required forms will likely be available in any tax preparing software applications, should you use one of them.

Individual Ownership

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

Form 1040. All individual taxpayers must submit Form 1040, so this is where you have to get started. At line 17 of the first page of Form 1040 is the net rental property profits or losses, subject to taxes. Please note that as a law abiding property manager with rental property income and expenses, you will not be allowed to take advantage of the easy Forms 1040A or 1040-EZ.

Schedule E. One addendum to Form 1040 that you must be familiar with is Schedule E. Of its many different applications, just the function of reporting leasing earnings and costs is applicable to your needs. The portion of Schedule E entitled as “Part 1” is the single part you need to complete. Some essential notes to keep in mind: if you ever own the rental mutually with someone else who isn’t your significant other, report about the income that you collected plus the expenses which you incurred. In addition, keep in mind that if you leased for only a part of the calendar year, or you have been leasing a section of your own private property, you will have to distribute expenditures concerning rental and non-rental usage. View the collection of articles entitled Tax Deductible Rental Property Expenses, found inside of this Guide, for additional details.

Form 4562. Form 4562 is needed to quantify depreciation for your property, which you’ll want to deduct at line 18 of Schedule E. For additional information, view the article entitled, Depreciation Expenses for Rental Property, that is in this Guide.

Partnership/Corporate Ownership

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

Form 1065/1120-S. The form a collaboration uses to report all its company activities is Form 1065, that you will need to fill out if you have a partnership. Form 1120-S is utilized by an S corporation to report organization activities. Your current total leasing profits or deficit should be reported on Schedule K, line 2 of Form 1065 or 1120-S (Schedule K is embedded into these forms).

Form 8825. Form 8825 is designed for partnerships and S corporations, and it works just like Schedule E. Schedule E and Form 8852 are basically similar. Ensure that you include total sums of all income and operating costs sustained by the partnership or corporation (these will be allotted to each partner or investor in the future).

Schedule K-1. The total rental property profits or loss attributable to each shareholder or partner is reported by this tax form, according to the rental property ownership interest of each investor or business partner. The details of the K-1 provided to each individual partner should be reported on their Form 1040, Schedule E, Part II.

Limited Liability Company (LLC) Ownership

A single owner LLC is actually a disregarded entity for tax requirements, which means that you can file as if you’re an individual owner (look above). A multiple-member LLC can decide to be taxed either as a partnership or as an S corporation (look above).

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