Quick Tip: Each of the documents described just below are available on the Revenue Service’s webpage, at: http://www.irs.gov/Forms-&-Pubs. All the necessary forms are going to be available in any tax prep software programs, if you are using one.

Individual Ownership

Shared rental property ownership with a husband or wife, joint tenancy with right of survivorship, along with tenancy in common will be examples.

Form 1040. All independent tax payers need to use Form 1040, and this is where you’ll need to get started. Your annual net rental profits or financial loss subject to tax will be found on line 17 of the 1st page of the Form 1040. Be aware that as a law abiding landlord with rental income and expenses, you aren’t able to use the simplified Forms 1040A or 1040-EZ.

Schedule E. Schedule E is a certain addendum to Form 1040. It actually has numerous applications, though the purpose applicable to you is reporting of leasing income and expenditures. The single part of Schedule E that you have to fill in is the portion entitled “Part 1″. There are a few fundamental tips you need to bear in mind, including: whenever reporting on the rental you jointly own with anyone, other than your spouse, you only need to report the expenses which you suffered as well as the income that you acquired. Moreover, keep in mind that if you rented for only part of the year, or you were renting part of your personal property, you need to distribute expenditures concerning rental and non-rental use. For additional details, take a look at Tax Deductible Rental Property Expenses, the article set which is included inside this Guide.

Form 4562. At line 18 of Schedule E, you can deduct the depreciation on the property, which you will use Form 4562 to calculate. Look at the article titled Depreciation Expenses for Rental Property, found inside this Guide, to get more tips.

Partnership/Corporate Ownership

This includes a general or limited partnership, or S corporation.

Form 1065/1120-S. When you’ve got a partnership, you need to use Form 1065, the document a joint venture utilizes to report all its enterprise operations. An S corporation utilizes Form 1120-S to report its organization activities. Schedule K, line 2 of Form 1065 or 1120-S the place the total rental property loss or income are going to be reported (Schedule K is embedded in these forms).

Form 8825. Form 8825 is for partnerships and S corporations, but it works just like Schedule E. It is actually essentially very similar to Schedule E. Make sure you include whole amounts of any revenue and expenses sustained by the partnership or corporation (these are going to be divided among each partner or investor down the road).

Schedule K-1. The net rental property income or deficit attributable to each shareholder or business partner is reported by this form, in accordance with the ownership interest of the investor or partner. The details of the K-1 received by every partner needs to be reported on his / her Form 1040, Schedule E, Part II.

LLC Ownership

A one member limited liability company is actually a disregarded entity for tax objectives, so that you can file as if you’re an independent owner (see above). A multiple-member LLC may choose to be taxed as either a partnership or as an S corporation (notice 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.