NOTE: You will find the different documents highlighted directly below on the Internal Revenue Service’s website: http://www.irs.gov/Forms-&-Pubs. All the required documents are included in any tax preparation software, if you’re using one of them.

Individual Ownership

Such as mutual property ownership with a husband or wife, tenancy in common, or shared tenancy with legal rights of survivorship.

Form 1040. All independent citizens need to submit Form 1040, and that is exactly where you should start. Your annual total leasing earnings or losses subject to taxation will appear at line 17 on the first page of Form 1040. You will not be able to employ the shortened Forms 1040A or 1040-EZ, as a law abiding landlord with leasing activity.

Schedule E. One addendum to Form 1040 that you must learn about is Schedule E. It really has various functions, and the function related to you is reporting of leasing income and costs. The only portion of Schedule E that you must finish is the section labeled “Part I”. There are several critical notes you need to remember, including: if you own the rental jointly with a person who isn’t your wife or husband, report only the revenue that you acquired as well as the expenditures that you suffered. Try to remember, furthermore, that you have to allocate expenditures between rental and non-rental use should you be leasing a share of your own personal residence, or when you only rented for a part of the calendar year. For more details, check out Tax Deductible Rental Property Expenses, the article collection that’s provided in this Guide.

Form 4562. At line 18 of Schedule E, you can deduct the depreciation on the rental, which you’ll employ Form 4562 to calculate. For additional advice, view the article called, Depreciation Expenses for Rental Property, that is provided in this Guide.

Partnership/Corporate Ownership

Including a general or limited partnership or S corporation.

Form 1065/1120-S. For people with a joint venture, you must employ Form 1065, the tax form a partnership utilizes to report each of its business activities. An S corporation employs Form 1120-S to report its enterprise operations. Schedule K, line 2 of Form 1065 or 1120-S is the place where the net rental loss or profits are reported (Those documents are embedded with Schedule K).

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 very much the same. Be sure that all profits and expenses sustained by the corporation or partnership are provided in their whole amounts (Later, these should be allotted to each investor or business partner).

Schedule K-1. This document reports the net rental revenue or deficit owing to each business partner or investor relative to that partner or investor’s rental property ownership interest. The elements of the K-1 given to every partner must be reported on her / his Form 1040, Schedule E, Part II.

Limited Liability Company (LLC) Ownership

You could file like you were an individual owner because, for income tax requirements, a single-member LLC is actually a disregarded entity (see above). A multiple-member LLC has the option to be taxed as either 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.