File your Taxes for Free!
  • Get your maximum refund*
  • 100% accurate calculations guaranteed*

TurboTax Federal Free Edition - File Taxes Online

Don't let filing your taxes get you down! We'll help make it as easy as possible. With e-file and direct deposit, there's no faster way to get your refund!

Approved TurboTax Affiliate Site. TurboTax and TurboTax Online, among others, are registered trademarks and/or service marks of Intuit Inc. in the United States and other countries. Other parties' trademarks or service marks are the property of the respective owners.


© 2012 - 2018 All rights reserved.

This is an Approved TurboTax Affiliate site. TurboTax and TurboTax Online, among other are registered trademarks and/or service marks of Intuit, Inc. in the United States and other countries. Other parties' trademarks or service marks are the property of the respective owners.
When discussing "Free e-file", note that state e-file is an additional fee. E-file fees do not apply to New York state returns. Prices are subject to change without notice. E-file and get your refund faster
*If you pay an IRS or state penalty or interest because of a TurboTax calculations error, we'll pay you the penalty and interest.
*Maximum Refund Guarantee - or Your Money Back: If you get a larger refund or smaller tax due from another tax preparation method, we'll refund the applicable TurboTax federal and/or state purchase price paid. TurboTax Federal Free Edition customers are entitled to payment of $14.99 and a refund of your state purchase price paid. Claims must be submitted within sixty (60) days of your TurboTax filing date and no later than 6/15/14. E-file, Audit Defense, Professional Review, Refund Transfer and technical support fees are excluded. This guarantee cannot be combined with the TurboTax Satisfaction (Easy) Guarantee. *We're so confident your return will be done right, we guarantee it. Accurate calculations guaranteed. If you pay an IRS or state penalty or interest because of a TurboTax calculations error, we'll pay you the penalty and interest.
https://turbotax.intuit.com/corp/guarantees.jsp

10 Ez Form

1040 X Tax FormIrs Tax 1040ezHow Do I Amend A Tax ReturnIrs.gov Form 1040xHow To File Amended Tax Return TurbotaxOnline Tax PreparationFile Federal Taxes Online For Free1040 EzCan I Amend My 2008 Tax ReturnI Need Tax Instruction Booklet For 1040ezIrs Amended FormTax Return AmendmentHow To Do An Amended Tax Return On TurbotaxWhere To File 2012 Tax ReturnEfile State Tax ReturnAmend 2012 TaxesHow To File Unemployment On Tax ReturnFile A Free Tax ExtensionHr Block Free MilitaryTax Filing Extension Deadline 2012State Income Tax Free FilingFile State TaxIncome Tax ReturnTax Filing Tips1040es1040ez Form 2014Free State Tax FileH And R Block1040 Ez Forms And InstructionsFile Taxes 2008How To Do 1040ez Tax FormWww Irs Gov 2011 Tax FormsAmended FormFree Tax ExtentionFree File State TaxesSample 1040ezWww Freetax ComFree File Federal And State TaxesTurbotax 1040ezAmendment Tax Return Form

10 Ez Form

10 ez form 13. 10 ez form   How To Get Tax Help Table of Contents Whether it's help with a tax issue, preparing your tax return or a need for a free publication or form, get the help you need the way you want it: online, use a smart phone, call or walk in to an IRS office or volunteer site near you. 10 ez form Free help with your tax return. 10 ez form   You can get free help preparing your return nationwide from IRS-certified volunteers. 10 ez form The Volunteer Income Tax Assistance (VITA) program helps low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers. 10 ez form The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. 10 ez form Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. 10 ez form In addition, some VITA and TCE sites provide taxpayers the opportunity to prepare their own return with help from an IRS-certified volunteer. 10 ez form To find the nearest VITA or TCE site, you can use the VITA Locator Tool on IRS. 10 ez form gov, download the IRS2Go app, or call 1-800-906-9887. 10 ez form   As part of the TCE program, AARP offers the Tax-Aide counseling program. 10 ez form To find the nearest AARP Tax-Aide site, visit AARP's website at www. 10 ez form aarp. 10 ez form org/money/taxaide or call 1-888-227-7669. 10 ez form For more information on these programs, go to IRS. 10 ez form gov and enter “VITA” in the search box. 10 ez form Internet. 10 ez form    IRS. 10 ez form gov and IRS2Go are ready when you are —24 hours a day, 7 days a week. 10 ez form Download the free IRS2Go app from the iTunes app store or from Google Play. 10 ez form Use it to check your refund status, order transcripts of your tax returns or tax account, watch the IRS YouTube channel, get IRS news as soon as it's released to the public, subscribe to filing season updates or daily tax tips, and follow the IRS Twitter news feed, @IRSnews, to get the latest federal tax news, including information about tax law changes and important IRS programs. 10 ez form Check the status of your 2013 refund with the Where's My Refund? application on IRS. 10 ez form gov or download the IRS2Go app and select the Refund Status option. 10 ez form The IRS issues more than 9 out of 10 refunds in less than 21 days. 10 ez form Using these applications, you can start checking on the status of your return within 24 hours after we receive your e-filed return or 4 weeks after you mail a paper return. 10 ez form You will also be given a personalized refund date as soon as the IRS processes your tax return and approves your refund. 10 ez form The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. 10 ez form Use the Interactive Tax Assistant (ITA) to research your tax questions. 10 ez form No need to wait on the phone or stand in line. 10 ez form The ITA is available 24 hours a day, 7 days a week, and provides you with a variety of tax information related to general filing topics, deductions, credits, and income. 10 ez form When you reach the response screen, you can print the entire interview and the final response for your records. 10 ez form New subject areas are added on a regular basis. 10 ez form  Answers not provided through ITA may be found in Tax Trails, one of the Tax Topics on IRS. 10 ez form gov which contain general individual and business tax information or by searching the IRS Tax Map, which includes an international subject index. 10 ez form You can use the IRS Tax Map, to search publications and instructions by topic or keyword. 10 ez form The IRS Tax Map integrates forms and publications into one research tool and provides single-point access to tax law information by subject. 10 ez form When the user searches the IRS Tax Map, they will be provided with links to related content in existing IRS publications, forms and instructions, questions and answers, and Tax Topics. 10 ez form Coming this filing season, you can immediately view and print for free all 5 types of individual federal tax transcripts (tax returns, tax account, record of account, wage and income statement, and certification of non-filing) using Get Transcript. 10 ez form You can also ask the IRS to mail a return or an account transcript to you. 10 ez form Only the mail option is available by choosing the Tax Records option on the IRS2Go app by selecting Mail Transcript on IRS. 10 ez form gov or by calling 1-800-908-9946. 10 ez form Tax return and tax account transcripts are generally available for the current year and the past three years. 10 ez form Determine if you are eligible for the EITC and estimate the amount of the credit with the Earned Income Tax Credit (EITC) Assistant. 10 ez form Visit Understanding Your IRS Notice or Letter to get answers to questions about a notice or letter you received from the IRS. 10 ez form If you received the First Time Homebuyer Credit, you can use the First Time Homebuyer Credit Account Look-up tool for information on your repayments and account balance. 10 ez form Check the status of your amended return using Where's My Amended Return? Go to IRS. 10 ez form gov and enter Where's My Amended Return? in the search box. 10 ez form You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. 10 ez form It can take up to 3 weeks from the date you mailed it to show up in our system. 10 ez form Make a payment using one of several safe and convenient electronic payment options available on IRS. 10 ez form gov. 10 ez form Select the Payment tab on the front page of IRS. 10 ez form gov for more information. 10 ez form Determine if you are eligible and apply for an online payment agreement, if you owe more tax than you can pay today. 10 ez form Figure your income tax withholding with the IRS Withholding Calculator on IRS. 10 ez form gov. 10 ez form Use it if you've had too much or too little withheld, your personal situation has changed, you're starting a new job or you just want to see if you're having the right amount withheld. 10 ez form Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. 10 ez form gov. 10 ez form Request an Electronic Filing PIN by going to IRS. 10 ez form gov and entering Electronic Filing PIN in the search box. 10 ez form Download forms, instructions and publications, including accessible versions for people with disabilities. 10 ez form Locate the nearest Taxpayer Assistance Center (TAC) using the Office Locator tool on IRS. 10 ez form gov, or choose the Contact Us option on the IRS2Go app and search Local Offices. 10 ez form An employee can answer questions about your tax account or help you set up a payment plan. 10 ez form Before you visit, check the Office Locator on IRS. 10 ez form gov, or Local Offices under Contact Us on IRS2Go to confirm the address, phone number, days and hours of operation, and the services provided. 10 ez form If you have a special need, such as a disability, you can request an appointment. 10 ez form Call the local number listed in the Office Locator, or look in the phone book under United States Government, Internal Revenue Service. 10 ez form Apply for an Employer Identification Number (EIN). 10 ez form Go to IRS. 10 ez form gov and enter Apply for an EIN in the search box. 10 ez form Read the Internal Revenue Code, regulations, or other official guidance. 10 ez form Read Internal Revenue Bulletins. 10 ez form Sign up to receive local and national tax news and more by email. 10 ez form Just click on “subscriptions” above the search box on IRS. 10 ez form gov and choose from a variety of options. 10 ez form    Phone. 10 ez form You can call the IRS, or you can carry it in your pocket with the IRS2Go app on your smart phone or tablet. 10 ez form Download the free IRS2Go app from the iTunes app store or from Google Play. 10 ez form Call to locate the nearest volunteer help site, 1-800-906-9887 or you can use the VITA Locator Tool on IRS. 10 ez form gov, or download the IRS2Go app. 10 ez form Low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. 10 ez form The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. 10 ez form Most VITA and TCE sites offer free electronic filing. 10 ez form Some VITA and TCE sites provide IRS-certified volunteers who can help prepare your tax return. 10 ez form Through the TCE program, AARP offers the Tax-Aide counseling program; call 1-888-227-7669 to find the nearest Tax-Aide location. 10 ez form Call the automated Where's My Refund? information hotline to check the status of your 2013 refund 24 hours a day, 7 days a week at 1-800-829-1954. 10 ez form If you e-file, you can start checking on the status of your return within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. 10 ez form The IRS issues more than 9 out of 10 refunds in less than 21 days. 10 ez form Where's My Refund? will give you a personalized refund date as soon as the IRS processes your tax return and approves your refund. 10 ez form Before you call this automated hotline, have your 2013 tax return handy so you can enter your social security number, your filing status, and the exact whole dollar amount of your refund. 10 ez form The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. 10 ez form Note, the above information is for our automated hotline. 10 ez form Our live phone and walk-in assistors can research the status of your refund only if it's been 21 days or more since you filed electronically or more than 6 weeks since you mailed your paper return. 10 ez form Call the Amended Return Hotline, 1-866-464-2050, to check the status of your amended return. 10 ez form You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. 10 ez form It can take up to 3 weeks from the date you mailed it to show up in our system. 10 ez form Call 1-800-TAX-FORM (1-800-829-3676) to order current-year forms, instructions, publications, and prior-year forms and instructions (limited to 5 years). 10 ez form You should receive your order within 10 business days. 10 ez form Call TeleTax, 1-800-829-4477, to listen to pre-recorded messages covering general and business tax information. 10 ez form If, between January and April 15, you still have questions about the Form 1040, 1040A, or 1040EZ (like filing requirements, dependents, credits, Schedule D, pensions and IRAs or self-employment taxes), call 1-800-829-1040. 10 ez form Call using TTY/TDD equipment, 1-800-829-4059 to ask tax questions or order forms and publications. 10 ez form The TTY/TDD telephone number is for people who are deaf, hard of hearing, or have a speech disability. 10 ez form These individuals can also contact the IRS through relay services such as the Federal Relay Service. 10 ez form    Walk-in. 10 ez form You can find a selection of forms, publications and services — in-person. 10 ez form Products. 10 ez form You can walk in to some post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. 10 ez form Some IRS offices, libraries, and city and county government offices have a collection of products available to photocopy from reproducible proofs. 10 ez form Services. 10 ez form You can walk in to your local TAC for face-to-face tax help. 10 ez form An employee can answer questions about your tax account or help you set up a payment plan. 10 ez form Before visiting, use the Office Locator tool on IRS. 10 ez form gov, or choose the Contact Us option on the IRS2Go app and search Local Offices for days and hours of operation, and services provided. 10 ez form    Mail. 10 ez form You can send your order for forms, instructions, and publications to the address below. 10 ez form You should receive a response within 10 business days after your request is received. 10 ez form Internal Revenue Service 1201 N. 10 ez form Mitsubishi Motorway Bloomington, IL 61705-6613    The Taxpayer Advocate Service Is Here to Help You. 10 ez form The Taxpayer Advocate Service (TAS) is your voice at the IRS. 10 ez form Our job is to ensure that every taxpayer is treated fairly and that you know and understand your rights. 10 ez form   What can TAS do for you? We can offer you free help with IRS problems that you can't resolve on your own. 10 ez form We know this process can be confusing, but the worst thing you can do is nothing at all! TAS can help if you can't resolve your tax problem and: Your problem is causing financial difficulties for you, your family, or your business. 10 ez form You face (or your business is facing) an immediate threat of adverse action. 10 ez form You've tried repeatedly to contact the IRS but no one has responded, or the IRS hasn't responded by the date promised. 10 ez form   If you qualify for our help, you'll be assigned to one advocate who'll be with you at every turn and will do everything possible to resolve your problem. 10 ez form Here's why we can help: TAS is an independent organization within the IRS. 10 ez form Our advocates know how to work with the IRS. 10 ez form Our services are free and tailored to meet your needs. 10 ez form We have offices in every state, the District of Columbia, and Puerto Rico. 10 ez form   How can you reach us? If you think TAS can help you, call your local advocate, whose number is in your local directory and at Taxpayer Advocate, or call us toll-free at 1-877-777-4778. 10 ez form   How else does TAS help taxpayers?  TAS also works to resolve large-scale, systemic problems that affect many taxpayers. 10 ez form If you know of one of these broad issues, please report it to us through our Systemic Advocacy Management System. 10 ez form Low Income Taxpayer Clinics. 10 ez form   Low Income Taxpayer Clinics (LITCs) serve individuals whose income is below a certain level and need to resolve tax problems such as audits, appeals, and tax collection disputes. 10 ez form Some clinics can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. 10 ez form Visit Taxpayer Advocate or see IRS Publication 4134, Low Income Taxpayer Clinic List. 10 ez form Prev  Up  Next   Home   More Online Publications
Print - Click this link to Print this page

Understanding your CP51C Notice

We computed the tax on your Form 1040, 1040A or 1040EZ. You owe taxes.


What you need to do

  • Read your notice carefully. It will explain how we calculated your tax return.
  • You don't need to do anything if you agree with our calculations.
  • Contact us if you disagree with the amount of tax we computed.

You may want to...


Answers to Common Questions

What should I do if I disagree with the notice?
Call us at the toll free number on the top right corner of your notice. Please have your paperwork (such as cancelled checks, amended return, etc.) ready when you call.


Tips for next year

Consider filing your taxes electronically. Filing online can help you avoid mistakes and find credits and deductions that you may qualify for. In many cases you can file for free. Learn more about e-file.

Page Last Reviewed or Updated: 04-Mar-2014

Printable samples of this notice (PDF)

 

Tax publications you may find useful

 

How to get help

  • Call the 1-800 number listed on the top right corner of your notice.
  • Authorize someone (e.g., accountant) to contact the IRS on your behalf using Form 2848.
  • See if you qualify for help from a Low Income Taxpayer Clinic.
     

The 10 Ez Form

10 ez form 9. 10 ez form   Rental Income and Expenses Table of Contents Introduction Useful Items - You may want to see: Rental Income Rental ExpensesVacant while listed for sale. 10 ez form Repairs and Improvements Other Expenses Property Changed to Rental Use Renting Part of Property Not Rented for Profit Personal Use of Dwelling Unit (Including Vacation Home)Example. 10 ez form Dividing Expenses Dwelling Unit Used as a Home Reporting Income and Deductions DepreciationChanging your accounting method to deduct unclaimed depreciation. 10 ez form Limits on Rental LossesAt-Risk Rules Passive Activity Limits How To Report Rental Income and ExpensesSchedule E (Form 1040) Introduction This chapter discusses rental income and expenses. 10 ez form It also covers the following topics. 10 ez form Personal use of dwelling unit (including vacation home). 10 ez form Depreciation. 10 ez form Limits on rental losses. 10 ez form How to report your rental income and expenses. 10 ez form If you sell or otherwise dispose of your rental property, see Publication 544, Sales and Other Dispositions of Assets. 10 ez form If you have a loss from damage to, or theft of, rental property, see Publication 547, Casualties, Disasters, and Thefts. 10 ez form If you rent a condominium or a cooperative apartment, some special rules apply to you even though you receive the same tax treatment as other owners of rental property. 10 ez form See Publication 527, Residential Rental Property, for more information. 10 ez form Useful Items - You may want to see: Publication 527 Residential Rental Property 534 Depreciating Property Placed in Service Before 1987 535 Business Expenses 925 Passive Activity and At-Risk Rules 946 How To Depreciate Property Form (and Instructions) 4562 Depreciation and Amortization 6251 Alternative Minimum Tax—Individuals 8582 Passive Activity Loss Limitations Schedule E (Form 1040) Supplemental Income and Loss Rental Income In most cases, you must include in your gross income all amounts you receive as rent. 10 ez form Rental income is any payment you receive for the use or occupation of property. 10 ez form In addition to amounts you receive as normal rent payments, there are other amounts that may be rental income. 10 ez form When to report. 10 ez form   If you are a cash-basis taxpayer, you report rental income on your return for the year you actually or constructively receive it. 10 ez form You are a cash-basis taxpayer if you report income in the year you receive it, regardless of when it was earned. 10 ez form You constructively receive income when it is made available to you, for example, by being credited to your bank account. 10 ez form   For more information about when you constructively receive income, see Accounting Methods in chapter 1. 10 ez form Advance rent. 10 ez form   Advance rent is any amount you receive before the period that it covers. 10 ez form Include advance rent in your rental income in the year you receive it regardless of the period covered or the method of accounting you use. 10 ez form Example. 10 ez form You sign a 10-year lease to rent your property. 10 ez form In the first year, you receive $5,000 for the first year's rent and $5,000 as rent for the last year of the lease. 10 ez form You must include $10,000 in your income in the first year. 10 ez form Canceling a lease. 10 ez form   If your tenant pays you to cancel a lease, the amount you receive is rent. 10 ez form Include the payment in your income in the year you receive it regardless of your method of accounting. 10 ez form Expenses paid by tenant. 10 ez form   If your tenant pays any of your expenses, the payments are rental income. 10 ez form Because you must include this amount in income, you can deduct the expenses if they are deductible rental expenses. 10 ez form See Rental Expenses , later, for more information. 10 ez form Property or services. 10 ez form   If you receive property or services, instead of money, as rent, include the fair market value of the property or services in your rental income. 10 ez form   If the services are provided at an agreed upon or specified price, that price is the fair market value unless there is evidence to the contrary. 10 ez form Security deposits. 10 ez form   Do not include a security deposit in your income when you receive it if you plan to return it to your tenant at the end of the lease. 10 ez form But if you keep part or all of the security deposit during any year because your tenant does not live up to the terms of the lease, include the amount you keep in your income in that year. 10 ez form   If an amount called a security deposit is to be used as a final payment of rent, it is advance rent. 10 ez form Include it in your income when you receive it. 10 ez form Part interest. 10 ez form   If you own a part interest in rental property, you must report your part of the rental income from the property. 10 ez form Rental of property also used as your home. 10 ez form   If you rent property that you also use as your home and you rent it less than 15 days during the tax year, do not include the rent you receive in your income and do not deduct rental expenses. 10 ez form However, you can deduct on Schedule A (Form 1040) the interest, taxes, and casualty and theft losses that are allowed for nonrental property. 10 ez form See Personal Use of Dwelling Unit (Including Vacation Home) , later. 10 ez form Rental Expenses This part discusses expenses of renting property that you ordinarily can deduct from your rental income. 10 ez form It includes information on the expenses you can deduct if you rent part of your property, or if you change your property to rental use. 10 ez form Depreciation , which you can also deduct from your rental income, is discussed later. 10 ez form Personal use of rental property. 10 ez form   If you sometimes use your rental property for personal purposes, you must divide your expenses between rental and personal use. 10 ez form Also, your rental expense deductions may be limited. 10 ez form See Personal Use of Dwelling Unit (Including Vacation Home) , later. 10 ez form Part interest. 10 ez form   If you own a part interest in rental property, you can deduct expenses that you paid according to your percentage of ownership. 10 ez form When to deduct. 10 ez form   If you are a cash-basis taxpayer, you generally deduct your rental expenses in the year you pay them. 10 ez form Depreciation. 10 ez form   You can begin to depreciate rental property when it is ready and available for rent. 10 ez form See Placed-in-Service under When Does Depreciation Begin and End in chapter 2 of Publication 527. 10 ez form Pre-rental expenses. 10 ez form   You can deduct your ordinary and necessary expenses for managing, conserving, or maintaining rental property from the time you make it available for rent. 10 ez form Uncollected rent. 10 ez form   If you are a cash-basis taxpayer, do not deduct uncollected rent. 10 ez form Because you have not included it in your income, it is not deductible. 10 ez form Vacant rental property. 10 ez form   If you hold property for rental purposes, you may be able to deduct your ordinary and necessary expenses (including depreciation) for managing, conserving, or maintaining the property while the property is vacant. 10 ez form However, you cannot deduct any loss of rental income for the period the property is vacant. 10 ez form Vacant while listed for sale. 10 ez form   If you sell property you held for rental purposes, you can deduct the ordinary and necessary expenses for managing, conserving, or maintaining the property until it is sold. 10 ez form If the property is not held out and available for rent while listed for sale, the expenses are not deductible rental expenses. 10 ez form Repairs and Improvements Generally, an expense for repairing or maintaining your rental property may be deducted if you are not required to capitalize the expense. 10 ez form Improvements. 10 ez form   You must capitalize any expense you pay to improve your rental property. 10 ez form An expense is for an improvement if it results in a betterment to your property, restores your property, or adapts your property to a new or different use. 10 ez form Betterments. 10 ez form   Expenses that may result in a betterment to your property include expenses for fixing a pre-existing defect or condition, enlarging or expanding your property, or increasing the capacity, strength, or quality of your property. 10 ez form Restoration. 10 ez form   Expenses that may be for restoration include expenses for replacing a substantial structural part of your property, repairing damage to your property after you properly adjusted the basis of your property as a result of a casualty loss, or rebuilding your property to a like-new condition. 10 ez form Adaptation. 10 ez form   Expenses that may be for adaptation include expenses for altering your property to a use that is not consistent with the intended ordinary use of your property when you began renting the property. 10 ez form Separate the costs of repairs and improvements, and keep accurate records. 10 ez form You will need to know the cost of improvements when you sell or depreciate your property. 10 ez form The expenses you capitalize for improving your property can generally be depreciated as if the improvement were separate property. 10 ez form Other Expenses Other expenses you can deduct from your rental income include advertising, cleaning and maintenance, utilities, fire and liability insurance, taxes, interest, commissions for the collection of rent, ordinary and necessary travel and transportation, and other expenses, discussed next. 10 ez form Insurance premiums paid in advance. 10 ez form   If you pay an insurance premium for more than one year in advance, for each year of coverage you can deduct the part of the premium payment that will apply to that year. 10 ez form You cannot deduct the total premium in the year you pay it. 10 ez form Legal and other professional fees. 10 ez form   You can deduct, as a rental expense, legal and other professional expenses, such as tax return preparation fees you paid to prepare Schedule E (Form 1040), Part I. 10 ez form For example, on your 2013 Schedule E, you can deduct fees paid in 2013 to prepare your 2012 Schedule E, Part I. 10 ez form You can also deduct, as a rental expense, any expense (other than federal taxes and penalties) you paid to resolve a tax underpayment related to your rental activities. 10 ez form Local benefit taxes. 10 ez form   In most cases, you cannot deduct charges for local benefits that increase the value of your property, such as charges for putting in streets, sidewalks, or water and sewer systems. 10 ez form These charges are nondepreciable capital expenditures, and must be added to the basis of your property. 10 ez form However, you can deduct local benefit taxes that are for maintaining, repairing, or paying interest charges for the benefits. 10 ez form Local transportation expenses. 10 ez form    You may be able to deduct your ordinary and necessary local transportation expenses if you incur them to collect rental income or to manage, conserve, or maintain your rental property. 10 ez form However, transportation expenses incurred to travel between your home and a rental property generally constitute nondeductible commuting costs unless you use your home as your principal place of business. 10 ez form See Publication 587, Business Use of Your Home, for information on determining if your home office qualifies as a principal place of business. 10 ez form   Generally, if you use your personal car, pickup truck, or light van for rental activities, you can deduct the expenses using one of two methods: actual expenses or the standard mileage rate. 10 ez form For 2013, the standard mileage rate for business use is 56. 10 ez form 5 cents per mile. 10 ez form For more information, see chapter 26. 10 ez form    To deduct car expenses under either method, you must keep records that follow the rules in chapter 26. 10 ez form In addition, you must complete Form 4562, Part V, and attach it to your tax return. 10 ez form Rental of equipment. 10 ez form   You can deduct the rent you pay for equipment that you use for rental purposes. 10 ez form However, in some cases, lease contracts are actually purchase contracts. 10 ez form If so, you cannot deduct these payments. 10 ez form You can recover the cost of purchased equipment through depreciation. 10 ez form Rental of property. 10 ez form   You can deduct the rent you pay for property that you use for rental purposes. 10 ez form If you buy a leasehold for rental purposes, you can deduct an equal part of the cost each year over the term of the lease. 10 ez form Travel expenses. 10 ez form   You can deduct the ordinary and necessary expenses of traveling away from home if the primary purpose of the trip is to collect rental income or to manage, conserve, or maintain your rental property. 10 ez form You must properly allocate your expenses between rental and nonrental activities. 10 ez form You cannot deduct the cost of traveling away from home if the primary purpose of the trip was to improve your property. 10 ez form You recover the cost of improvements by taking depreciation. 10 ez form For information on travel expenses, see chapter 26. 10 ez form    To deduct travel expenses, you must keep records that follow the rules in chapter 26. 10 ez form   See Rental Expenses in Publication 527 for more information. 10 ez form Property Changed to Rental Use If you change your home or other property (or a part of it) to rental use at any time other than the beginning of your tax year, you must divide yearly expenses, such as taxes and insurance, between rental use and personal use. 10 ez form You can deduct as rental expenses only the part of the expense that is for the part of the year the property was used or held for rental purposes. 10 ez form You cannot deduct depreciation or insurance for the part of the year the property was held for personal use. 10 ez form However, you can include the home mortgage interest, qualified mortgage insurance premiums, and real estate tax expenses for the part of the year the property was held for personal use as an itemized deduction on Schedule A (Form 1040). 10 ez form Example. 10 ez form Your tax year is the calendar year. 10 ez form You moved from your home in May and started renting it out on June 1. 10 ez form You can deduct as rental expenses seven-twelfths of your yearly expenses, such as taxes and insurance. 10 ez form Starting with June, you can deduct as rental expenses the amounts you pay for items generally billed monthly, such as utilities. 10 ez form Renting Part of Property If you rent part of your property, you must divide certain expenses between the part of the property used for rental purposes and the part of the property used for personal purposes, as though you actually had two separate pieces of property. 10 ez form You can deduct the expenses related to the part of the property used for rental purposes, such as home mortgage interest, qualified mortgage insurance premiums, and real estate taxes, as rental expenses on Schedule E (Form 1040). 10 ez form You can also deduct as rental expenses a portion of other expenses that normally are nondeductible personal expenses, such as expenses for electricity or painting the outside of your house. 10 ez form There is no change in the types of expenses deductible for the personal-use part of your property. 10 ez form Generally, these expenses may be deducted only if you itemize your deductions on Schedule A (Form 1040). 10 ez form You cannot deduct any part of the cost of the first phone line even if your tenants have unlimited use of it. 10 ez form You do not have to divide the expenses that belong only to the rental part of your property. 10 ez form For example, if you paint a room that you rent, or if you pay premiums for liability insurance in connection with renting a room in your home, your entire cost is a rental expense. 10 ez form If you install a second phone line strictly for your tenants' use, all of the cost of the second line is deductible as a rental expense. 10 ez form You can deduct depreciation, discussed later, on the part of the house used for rental purposes as well as on the furniture and equipment you use for rental purposes. 10 ez form How to divide expenses. 10 ez form   If an expense is for both rental use and personal use, such as mortgage interest or heat for the entire house, you must divide the expense between the rental use and the personal use. 10 ez form You can use any reasonable method for dividing the expense. 10 ez form It may be reasonable to divide the cost of some items (for example, water) based on the number of people using them. 10 ez form The two most common methods for dividing an expense are based on (1) the number of rooms in your home, and (2) the square footage of your home. 10 ez form Not Rented for Profit If you do not rent your property to make a profit, you can deduct your rental expenses only up to the amount of your rental income. 10 ez form You cannot deduct a loss or carry forward to the next year any rental expenses that are more than your rental income for the year. 10 ez form For more information about the rules for an activity not engaged in for profit, see Not-for-Profit Activities in chapter 1 of Publication 535. 10 ez form Where to report. 10 ez form   Report your not-for-profit rental income on Form 1040, line 21. 10 ez form For example, you can include your mortgage interest and any qualified mortgage insurance premiums (if you use the property as your main home or second home), real estate taxes, and casualty losses on the appropriate lines of Schedule A (Form 1040) if you itemize your deductions. 10 ez form   If you itemize your deductions, claim your other rental expenses, subject to the rules explained in chapter 1 of Publication 535, as miscellaneous itemized deductions on Form 1040, Schedule A, line 23. 10 ez form You can deduct these expenses only if they, together with certain other miscellaneous itemized deductions, total more than 2% of your adjusted gross income. 10 ez form Personal Use of Dwelling Unit (Including Vacation Home) If you have any personal use of a dwelling unit (including a vacation home) that you rent, you must divide your expenses between rental use and personal use. 10 ez form In general, your rental expenses will be no more than your total expenses multiplied by a fraction; the denominator of which is the total number of days the dwelling unit is used and the numerator of which is the total number of days actually rented at a fair rental price. 10 ez form Only your rental expenses may be deducted on Schedule E (Form 1040). 10 ez form Some of your personal expenses may be deductible if you itemize your deductions on Schedule A (Form 1040). 10 ez form You must also determine if the dwelling unit is considered a home. 10 ez form The amount of rental expenses that you can deduct may be limited if the dwelling unit is considered a home. 10 ez form Whether a dwelling unit is considered a home depends on how many days during the year are considered to be days of personal use. 10 ez form There is a special rule if you used the dwelling unit as a home and you rented it for less than 15 days during the year. 10 ez form Dwelling unit. 10 ez form   A dwelling unit includes a house, apartment, condominium, mobile home, boat, vacation home, or similar property. 10 ez form It also includes all structures or other property belonging to the dwelling unit. 10 ez form A dwelling unit has basic living accommodations, such as sleeping space, a toilet, and cooking facilities. 10 ez form   A dwelling unit does not include property used solely as a hotel, motel, inn, or similar establishment. 10 ez form Property is used solely as a hotel, motel, inn, or similar establishment if it is regularly available for occupancy by paying customers and is not used by an owner as a home during the year. 10 ez form Example. 10 ez form   You rent a room in your home that is always available for short-term occupancy by paying customers. 10 ez form You do not use the room yourself, and you allow only paying customers to use the room. 10 ez form The room is used solely as a hotel, motel, inn, or similar establishment and is not a dwelling unit. 10 ez form Dividing Expenses If you use a dwelling unit for both rental and personal purposes, divide your expenses between the rental use and the personal use based on the number of days used for each purpose. 10 ez form When dividing your expenses, follow these rules. 10 ez form Any day that the unit is rented at a fair rental price is a day of rental use even if you used the unit for personal purposes that day. 10 ez form This rule does not apply when determining whether you used the unit as a home. 10 ez form Any day that the unit is available for rent but not actually rented is not a day of rental use. 10 ez form Example. 10 ez form Your beach cottage was available for rent from June 1 through August 31 (92 days). 10 ez form During that time, except for the first week in August (7 days) when you were unable to find a renter, you rented the cottage at a fair rental price. 10 ez form The person who rented the cottage for July allowed you to use it over the weekend (2 days) without any reduction in or refund of rent. 10 ez form Your family also used the cottage during the last 2 weeks of May (14 days). 10 ez form The cottage was not used at all before May 17 or after August 31. 10 ez form You figure the part of the cottage expenses to treat as rental expenses as follows. 10 ez form The cottage was used for rental a total of 85 days (92 − 7). 10 ez form The days it was available for rent but not rented (7 days) are not days of rental use. 10 ez form The July weekend (2 days) you used it is rental use because you received a fair rental price for the weekend. 10 ez form You used the cottage for personal purposes for 14 days (the last 2 weeks in May). 10 ez form The total use of the cottage was 99 days (14 days personal use + 85 days rental use). 10 ez form Your rental expenses are 85/99 (86%) of the cottage expenses. 10 ez form Note. 10 ez form When determining whether you used the cottage as a home, the July weekend (2 days) you used it is considered personal use even though you received a fair rental price for the weekend. 10 ez form Therefore, you had 16 days of personal use and 83 days of rental use for this purpose. 10 ez form Because you used the cottage for personal purposes more than 14 days and more than 10% of the days of rental use (8 days), you used it as a home. 10 ez form If you have a net loss, you may not be able to deduct all of the rental expenses. 10 ez form See Dwelling Unit Used as a Home, next. 10 ez form Dwelling Unit Used as a Home If you use a dwelling unit for both rental and personal purposes, the tax treatment of the rental expenses you figured earlier under Dividing Expenses and rental income depends on whether you are considered to be using the dwelling unit as a home. 10 ez form You use a dwelling unit as a home during the tax year if you use it for personal purposes more than the greater of: 14 days, or 10% of the total days it is rented to others at a fair rental price. 10 ez form See What is a day of personal use , later. 10 ez form Fair rental price. 10 ez form   A fair rental price for your property generally is the amount of rent that a person who is not related to you would be willing to pay. 10 ez form The rent you charge is not a fair rental price if it is substantially less than the rents charged for other properties that are similar to your property in your area. 10 ez form   If a dwelling unit is used for personal purposes on a day it is rented at a fair rental price, do not count that day as a day of rental use in applying (2) above. 10 ez form Instead, count it as a day of personal use in applying both (1) and (2) above. 10 ez form What is a day of personal use?   A day of personal use of a dwelling unit is any day that the unit is used by any of the following persons. 10 ez form You or any other person who has an interest in the unit, unless you rent it to another owner as his or her main home under a shared equity financing agreement (defined later). 10 ez form However, see Days used as a main home before or after renting , later. 10 ez form A member of your family or a member of the family of any other person who owns an interest in the unit, unless the family member uses the dwelling unit as his or her main home and pays a fair rental price. 10 ez form Family includes only your spouse, brothers and sisters, half-brothers and half-sisters, ancestors (parents, grandparents, etc. 10 ez form ), and lineal descendants (children, grandchildren, etc. 10 ez form ). 10 ez form Anyone under an arrangement that lets you use some other dwelling unit. 10 ez form Anyone at less than a fair rental price. 10 ez form Main home. 10 ez form   If the other person or member of the family in (1) or (2) above has more than one home, his or her main home is ordinarily the one he or she lived in most of the time. 10 ez form Shared equity financing agreement. 10 ez form   This is an agreement under which two or more persons acquire undivided interests for more than 50 years in an entire dwelling unit, including the land, and one or more of the co-owners is entitled to occupy the unit as his or her main home upon payment of rent to the other co-owner or owners. 10 ez form Donation of use of property. 10 ez form   You use a dwelling unit for personal purposes if: You donate the use of the unit to a charitable organization, The organization sells the use of the unit at a fund-raising event, and The “purchaser” uses the unit. 10 ez form Examples. 10 ez form   The following examples show how to determine days of personal use. 10 ez form Example 1. 10 ez form You and your neighbor are co-owners of a condominium at the beach. 10 ez form Last year, you rented the unit to vacationers whenever possible. 10 ez form The unit was not used as a main home by anyone. 10 ez form Your neighbor used the unit for 2 weeks last year; you did not use it at all. 10 ez form Because your neighbor has an interest in the unit, both of you are considered to have used the unit for personal purposes during those 2 weeks. 10 ez form Example 2. 10 ez form You and your neighbors are co-owners of a house under a shared equity financing agreement. 10 ez form Your neighbors live in the house and pay you a fair rental price. 10 ez form Even though your neighbors have an interest in the house, the days your neighbors live there are not counted as days of personal use by you. 10 ez form This is because your neighbors rent the house as their main home under a shared equity financing agreement. 10 ez form Example 3. 10 ez form You own a rental property that you rent to your son. 10 ez form Your son does not own any interest in this property. 10 ez form He uses it as his main home and pays you a fair rental price. 10 ez form Your son's use of the property is not personal use by you because your son is using it as his main home, he owns no interest in the property, and he is paying you a fair rental price. 10 ez form Example 4. 10 ez form You rent your beach house to Joshua. 10 ez form Joshua rents his cabin in the mountains to you. 10 ez form You each pay a fair rental price. 10 ez form You are using your house for personal purposes on the days that Joshua uses it because your house is used by Joshua under an arrangement that allows you to use his house. 10 ez form Days used for repairs and maintenance. 10 ez form   Any day that you spend working substantially full time repairing and maintaining (not improving) your property is not counted as a day of personal use. 10 ez form Do not count such a day as a day of personal use even if family members use the property for recreational purposes on the same day. 10 ez form Days used as a main home before or after renting. 10 ez form   For purposes of determining whether a dwelling unit was used as a home, you may not have to count days you used the property as your main home before or after renting it or offering it for rent as days of personal use. 10 ez form Do not count them as days of personal use if: You rented or tried to rent the property for 12 or more consecutive months. 10 ez form You rented or tried to rent the property for a period of less than 12 consecutive months and the period ended because you sold or exchanged the property. 10 ez form However, this special rule does not apply when dividing expenses between rental and personal use. 10 ez form Examples. 10 ez form   The following examples show how to determine whether you used your rental property as a home. 10 ez form Example 1. 10 ez form You converted the basement of your home into an apartment with a bedroom, a bathroom, and a small kitchen. 10 ez form You rented the basement apartment at a fair rental price to college students during the regular school year. 10 ez form You rented to them on a 9-month lease (273 days). 10 ez form You figured 10% of the total days rented to others at a fair rental price is 27 days. 10 ez form During June (30 days), your brothers stayed with you and lived in the basement apartment rent free. 10 ez form Your basement apartment was used as a home because you used it for personal purposes for 30 days. 10 ez form Rent-free use by your brothers is considered personal use. 10 ez form Your personal use (30 days) is more than the greater of 14 days or 10% of the total days it was rented (27 days). 10 ez form Example 2. 10 ez form You rented the guest bedroom in your home at a fair rental price during the local college's homecoming, commencement, and football weekends (a total of 27 days). 10 ez form Your sister-in-law stayed in the room, rent free, for the last 3 weeks (21 days) in July. 10 ez form You figured 10% of the total days rented to others at a fair rental price is 3 days. 10 ez form The room was used as a home because you used it for personal purposes for 21 days. 10 ez form That is more than the greater of 14 days or 10% of the 27 days it was rented (3 days). 10 ez form Example 3. 10 ez form You own a condominium apartment in a resort area. 10 ez form You rented it at a fair rental price for a total of 170 days during the year. 10 ez form For 12 of those days, the tenant was not able to use the apartment and allowed you to use it even though you did not refund any of the rent. 10 ez form Your family actually used the apartment for 10 of those days. 10 ez form Therefore, the apartment is treated as having been rented for 160 (170 − 10) days. 10 ez form You figured 10% of the total days rented to others at a fair rental price is 16 days. 10 ez form Your family also used the apartment for 7 other days during the year. 10 ez form You used the apartment as a home because you used it for personal purposes for 17 days. 10 ez form That is more than the greater of 14 days or 10% of the 160 days it was rented (16 days). 10 ez form Minimal rental use. 10 ez form   If you use the dwelling unit as a home and you rent it less than 15 days during the year, that period is not treated as rental activity. 10 ez form See Used as a home but rented less than 15 days , later, for more information. 10 ez form Limit on deductions. 10 ez form   Renting a dwelling unit that is considered a home is not a passive activity. 10 ez form Instead, if your rental expenses are more than your rental income, some or all of the excess expenses cannot be used to offset income from other sources. 10 ez form The excess expenses that cannot be used to offset income from other sources are carried forward to the next year and treated as rental expenses for the same property. 10 ez form Any expenses carried forward to the next year will be subject to any limits that apply for that year. 10 ez form This limitation will apply to expenses carried forward to another year even if you do not use the property as your home for that subsequent year. 10 ez form   To figure your deductible rental expenses for this year and any carryover to next year, use Worksheet 9-1. 10 ez form Reporting Income and Deductions Property not used for personal purposes. 10 ez form   If you do not use a dwelling unit for personal purposes, see How To Report Rental Income and Expenses , later, for how to report your rental income and expenses. 10 ez form Property used for personal purposes. 10 ez form   If you do use a dwelling unit for personal purposes, then how you report your rental income and expenses depends on whether you used the dwelling unit as a home. 10 ez form Not used as a home. 10 ez form   If you use a dwelling unit for personal purposes, but not as a home, report all the rental income in your income. 10 ez form Since you used the dwelling unit for personal purposes, you must divide your expenses between the rental use and the personal use as described earlier in Dividing Expenses . 10 ez form The expenses for personal use are not deductible as rental expenses. 10 ez form   Your deductible rental expenses can be more than your gross rental income; however, see Limits on Rental Losses , later. 10 ez form Used as a home but rented less than 15 days. 10 ez form   If you use a dwelling unit as a home and you rent it less than 15 days during the year, its primary function is not considered to be rental and it should not be reported on Schedule E (Form 1040). 10 ez form You are not required to report the rental income and rental expenses from this activity. 10 ez form The expenses, including qualified mortgage interest, property taxes, and any qualified casualty loss will be reported as normally allowed on Schedule A (Form 1040). 10 ez form See the Instructions for Schedule A (Form 1040) for more information on deducting these expenses. 10 ez form Used as a home and rented 15 days or more. 10 ez form   If you use a dwelling unit as a home and rent it 15 days or more during the year, include all your rental income in your income. 10 ez form Since you used the dwelling unit for personal purposes, you must divide your expenses between the rental use and the personal use as described earlier in Dividing Expenses . 10 ez form The expenses for personal use are not deductible as rental expenses. 10 ez form   If you had a net profit from renting the dwelling unit for the year (that is, if your rental income is more than the total of your rental expenses, including depreciation), deduct all of your rental expenses. 10 ez form You do not need to use Worksheet 9-1. 10 ez form   However, if you had a net loss from renting the dwelling unit for the year, your deduction for certain rental expenses is limited. 10 ez form To figure your deductible rental expenses and any carryover to next year, use Worksheet 9-1. 10 ez form Depreciation You recover the cost of income-producing property through yearly tax deductions. 10 ez form You do this by depreciating the property; that is, by deducting some of the cost each year on your tax return. 10 ez form Three factors determine how much depreciation you can deduct each year: (1) your basis in the property, (2) the recovery period for the property, and (3) the depreciation method used. 10 ez form You cannot simply deduct your mortgage or principal payments, or the cost of furniture, fixtures, and equipment, as an expense. 10 ez form You can deduct depreciation only on the part of your property used for rental purposes. 10 ez form Depreciation reduces your basis for figuring gain or loss on a later sale or exchange. 10 ez form You may have to use Form 4562 to figure and report your depreciation. 10 ez form See How To Report Rental Income and Expenses , later. 10 ez form Alternative minimum tax (AMT). 10 ez form    If you use accelerated depreciation, you may be subject to the AMT. 10 ez form Accelerated depreciation allows you to deduct more depreciation earlier in the recovery period than you could deduct using a straight line method (same deduction each year). 10 ez form Claiming the correct amount of depreciation. 10 ez form   You should claim the correct amount of depreciation each tax year. 10 ez form If you did not claim all the depreciation you were entitled to deduct, you must still reduce your basis in the property by the full amount of depreciation that you could have deducted. 10 ez form   If you deducted an incorrect amount of depreciation for property in any year, you may be able to make a correction by filing Form 1040X, Amended U. 10 ez form S Individual Income Tax Return. 10 ez form If you are not allowed to make the correction on an amended return, you can change your accounting method to claim the correct amount of depreciation. 10 ez form See Claiming the correct amount of depreciation in chapter 2 of Publication 527 for more information. 10 ez form Changing your accounting method to deduct unclaimed depreciation. 10 ez form   To change your accounting method, you generally must file Form 3115, Application for Change in Accounting Method, to get the consent of the IRS. 10 ez form In some instances, that consent is automatic. 10 ez form For more information, see chapter 1 of Publication 946. 10 ez form Land. 10 ez form   You cannot depreciate the cost of land because land generally does not wear out, become obsolete, or get used up. 10 ez form The costs of clearing, grading, planting, and landscaping are usually all part of the cost of land and cannot be depreciated. 10 ez form More information. 10 ez form   See Publication 527 for more information about depreciating rental property and see Publication 946 for more information about depreciation. 10 ez form Limits on Rental Losses If you have a loss from your rental real estate activity, two sets of rules may limit the amount of loss you can deduct. 10 ez form You must consider these rules in the order shown below. 10 ez form At-risk rules. 10 ez form These rules are applied first if there is investment in your rental real estate activity for which you are not at risk. 10 ez form This applies only if the real property was placed in service after 1986. 10 ez form Passive activity limits. 10 ez form Generally, rental real estate activities are considered passive activities and losses are not deductible unless you have income from other passive activities to offset them. 10 ez form However, there are exceptions. 10 ez form At-Risk Rules You may be subject to the at-risk rules if you have: A loss from an activity carried on as a trade or business or for the production of income, and Amounts invested in the activity for which you are not fully at risk. 10 ez form Losses from holding real property (other than mineral property) placed in service before 1987 are not subject to the at-risk rules. 10 ez form In most cases, any loss from an activity subject to the at-risk rules is allowed only to the extent of the total amount you have at risk in the activity at the end of the tax year. 10 ez form You are considered at risk in an activity to the extent of cash and the adjusted basis of other property you contributed to the activity and certain amounts borrowed for use in the activity. 10 ez form See Publication 925 for more information. 10 ez form Passive Activity Limits In most cases, all rental real estate activities (except those of certain real estate professionals, discussed later) are passive activities. 10 ez form For this purpose, a rental activity is an activity from which you receive income mainly for the use of tangible property, rather than for services. 10 ez form Limits on passive activity deductions and credits. 10 ez form    Deductions or losses from passive activities are limited. 10 ez form You generally cannot offset income, other than passive income, with losses from passive activities. 10 ez form Nor can you offset taxes on income, other than passive income, with credits resulting from passive activities. 10 ez form Any excess loss or credit is carried forward to the next tax year. 10 ez form   For a detailed discussion of these rules, see Publication 925. 10 ez form    You may have to complete Form 8582 to figure the amount of any passive activity loss for the current tax year for all activities and the amount of the passive activity loss allowed on your tax return. 10 ez form Real estate professionals. 10 ez form   Rental activities in which you materially participated during the year are not passive activities if, for that year, you were a real estate professional. 10 ez form For a detailed discussion of the requirements, see Publication 527. 10 ez form For a detailed discussion of material participation, see Publication 925. 10 ez form Exception for Personal Use of Dwelling Unit If you used the rental property as a home during the year, any income, deductions, gain, or loss allocable to such use shall not be taken into account for purposes of the passive activity loss limitation. 10 ez form Instead, follow the rules explained in Personal Use of Dwelling Unit (Including Vacation Home), earlier. 10 ez form Exception for Rental Real Estate Activities With Active Participation If you or your spouse actively participated in a passive rental real estate activity, you may be able to deduct up to $25,000 of loss from the activity from your nonpassive income. 10 ez form This special allowance is an exception to the general rule disallowing losses in excess of income from passive activities. 10 ez form Similarly, you may be able to offset credits from the activity against the tax on up to $25,000 of nonpassive income after taking into account any losses allowed under this exception. 10 ez form Active participation. 10 ez form   You actively participated in a rental real estate activity if you (and your spouse) owned at least 10% of the rental property and you made management decisions or arranged for others to provide services (such as repairs) in a significant and bona fide sense. 10 ez form Management decisions that may count as active participation include approving new tenants, deciding on rental terms, approving expenditures, and similar decisions. 10 ez form Maximum special allowance. 10 ez form   The maximum special allowance is: $25,000 for single individuals and married individuals filing a joint return for the tax year, $12,500 for married individuals who file separate returns for the tax year and lived apart from their spouses at all times during the tax year, and $25,000 for a qualifying estate reduced by the special allowance for which the surviving spouse qualified. 10 ez form   If your modified adjusted gross income (MAGI) is $100,000 or less ($50,000 or less if married filing separately), you can deduct your loss up to the amount specified above. 10 ez form If your MAGI is more than $100,000 (more than $50,000 if married filing separately), your special allowance is limited to 50% of the difference between $150,000 ($75,000 if married filing separately) and your MAGI. 10 ez form   Generally, if your MAGI is $150,000 or more ($75,000 or more if you are married filing separately), there is no special allowance. 10 ez form More information. 10 ez form   See Publication 925 for more information on the passive loss limits, including information on the treatment of unused disallowed passive losses and credits and the treatment of gains and losses realized on the disposition of a passive activity. 10 ez form How To Report Rental Income and Expenses The basic form for reporting residential rental income and expenses is Schedule E (Form 1040). 10 ez form However, do not use that schedule to report a not-for-profit activity. 10 ez form See Not Rented for Profit, earlier. 10 ez form Providing substantial services. 10 ez form   If you provide substantial services that are primarily for your tenant's convenience, such as regular cleaning, changing linen, or maid service, report your rental income and expenses on Schedule C (Form 1040), Profit or Loss From Business, or Schedule C-EZ (Form 1040), Net Profit From Business (Sole Proprietorship). 10 ez form Substantial services do not include the furnishing of heat and light, cleaning of public areas, trash collection, etc. 10 ez form For information, see Publication 334, Tax Guide for Small Business. 10 ez form You also may have to pay self-employment tax on your rental income using Schedule SE (Form 1040), Self-Employment Tax. 10 ez form   Use Form 1065, U. 10 ez form S. 10 ez form Return of Partnership Income, if your rental activity is a partnership (including a partnership with your spouse unless it is a qualified joint venture). 10 ez form Qualified joint venture. 10 ez form   If you and your spouse each materially participate as the only members of a jointly owned and operated real estate business, and you file a joint return for the tax year, you can make a joint election to be treated as a qualified joint venture instead of a partnership. 10 ez form This election, in most cases, will not increase the total tax owed on the joint return, but it does give each of you credit for social security earnings on which retirement benefits are based and for Medicare coverage if your rental income is subject to self-employment tax. 10 ez form For more information, see Publication 527. 10 ez form Form 1098, Mortgage Interest Statement. 10 ez form    If you paid $600 or more of mortgage interest on your rental property to any one person, you should receive a Form 1098, or similar statement showing the interest you paid for the year. 10 ez form If you and at least one other person (other than your spouse if you file a joint return) were liable for, and paid interest on the mortgage, and the other person received the Form 1098, report your share of the interest on Schedule E (Form 1040), line 13. 10 ez form Attach a statement to your return showing the name and address of the other person. 10 ez form In the left margin of Schedule E, next to line 13, enter “See attached. 10 ez form ” Schedule E (Form 1040) If you rent buildings, rooms, or apartments, and provide basic services such as heat and light, trash collection, etc. 10 ez form , you normally report your rental income and expenses on Schedule E, Part I. 10 ez form List your total income, expenses, and depreciation for each rental property. 10 ez form Be sure to enter the number of fair rental and personal use days on line 2. 10 ez form If you have more than three rental or royalty properties, complete and attach as many Schedules E as are needed to list the properties. 10 ez form Complete lines 1 and 2 for each property. 10 ez form However, fill in lines 23a through 26 on only one Schedule E. 10 ez form On Schedule E, page 1, line 18, enter the depreciation you are claiming for each property. 10 ez form To find out if you need to attach Form 4562, see Form 4562, in chapter 3 of Publication 527. 10 ez form If you have a loss from your rental real estate activity, you also may need to complete one or both of the following forms. 10 ez form Form 6198, At-Risk Limitations. 10 ez form See At-Risk Rules , earlier. 10 ez form Also see Publication 925. 10 ez form Form 8582, Passive Activity Loss Limitations. 10 ez form See Passive Activity Limits , earlier. 10 ez form Page 2 of Schedule E is used to report income or loss from partnerships, S corporations, estates, trusts, and real estate mortgage investment conduits. 10 ez form If you need to use page 2 of Schedule E, be sure to use page 2 of the same Schedule E you used to enter your rental activity on page 1. 10 ez form Also, include the amount from line 26 (Part I) in the “Total income or (loss)” on line 41 (Part V). 10 ez form Worksheet 9-1. 10 ez form Worksheet for Figuring Rental Deductions for a Dwelling Unit Used as a Home Use this worksheet only if you answer “yes” to all of the following questions. 10 ez form Did you use the dwelling unit as a home this year? (See Dwelling Unit Used as a Home . 10 ez form ) Did you rent the dwelling unit at a fair rental price 15 days or more this year? Is the total of your rental expenses and depreciation more than your rental income? PART I. 10 ez form Rental Use Percentage A. 10 ez form Total days available for rent at fair rental price A. 10 ez form       B. 10 ez form Total days available for rent (line A) but not rented B. 10 ez form       C. 10 ez form Total days of rental use. 10 ez form Subtract line B from line A C. 10 ez form       D. 10 ez form Total days of personal use (including days rented at less than fair rental price) D. 10 ez form       E. 10 ez form Total days of rental and personal use. 10 ez form Add lines C and D E. 10 ez form       F. 10 ez form Percentage of expenses allowed for rental. 10 ez form Divide line C by line E     F. 10 ez form   PART II. 10 ez form Allowable Rental Expenses 1. 10 ez form Enter rents received 1. 10 ez form   2a. 10 ez form Enter the rental portion of deductible home mortgage interest and qualified mortgage insurance premiums (see instructions) 2a. 10 ez form       b. 10 ez form Enter the rental portion of real estate taxes b. 10 ez form       c. 10 ez form Enter the rental portion of deductible casualty and theft losses (see instructions) c. 10 ez form       d. 10 ez form Enter direct rental expenses (see instructions) d. 10 ez form       e. 10 ez form Fully deductible rental expenses. 10 ez form Add lines 2a–2d. 10 ez form Enter here and  on the appropriate lines on Schedule E (see instructions) 2e. 10 ez form   3. 10 ez form Subtract line 2e from line 1. 10 ez form If zero or less, enter -0- 3. 10 ez form   4a. 10 ez form Enter the rental portion of expenses directly related to operating or maintaining  the dwelling unit (such as repairs, insurance, and utilities) 4a. 10 ez form       b. 10 ez form Enter the rental portion of excess mortgage interest and qualified mortgage insurance premiums (see instructions) b. 10 ez form       c. 10 ez form Carryover of operating expenses from 2012 worksheet c. 10 ez form       d. 10 ez form Add lines 4a–4c d. 10 ez form       e. 10 ez form Allowable expenses. 10 ez form Enter the smaller of line 3 or line 4d (see instructions) 4e. 10 ez form   5. 10 ez form Subtract line 4e from line 3. 10 ez form If zero or less, enter -0- 5. 10 ez form   6a. 10 ez form Enter the rental portion of excess casualty and theft losses (see instructions) 6a. 10 ez form       b. 10 ez form Enter the rental portion of depreciation of the dwelling unit b. 10 ez form       c. 10 ez form Carryover of excess casualty losses and depreciation from 2012 worksheet c. 10 ez form       d. 10 ez form Add lines 6a–6c d. 10 ez form       e. 10 ez form Allowable excess casualty and theft losses and depreciation. 10 ez form Enter the smaller of  line 5 or line 6d (see instructions) 6e. 10 ez form   PART III. 10 ez form Carryover of Unallowed Expenses to Next Year 7a. 10 ez form Operating expenses to be carried over to next year. 10 ez form Subtract line 4e from line 4d 7a. 10 ez form   b. 10 ez form Excess casualty and theft losses and depreciation to be carried over to next year. 10 ez form  Subtract line 6e from line 6d b. 10 ez form   Worksheet 9-1 Instructions. 10 ez form Worksheet for Figuring Rental Deductions for a Dwelling Unit Used as a Home Caution. 10 ez form Use the percentage determined in Part I, line F, to figure the rental portions to enter on lines 2a–2c, 4a–4b, and 6a–6b of  Part II. 10 ez form Line 2a. 10 ez form Figure the mortgage interest on the dwelling unit that you could deduct on Schedule A as if you had not rented the unit. 10 ez form Do not include interest on a loan that did not benefit the dwelling unit. 10 ez form For example, do not include interest on a home equity loan used to pay off credit cards or other personal loans, buy a car, or pay college tuition. 10 ez form Include interest on a loan used to buy, build, or improve the dwelling unit, or to refinance such a loan. 10 ez form Include the rental portion of this interest in the total you enter on line 2a of the worksheet. 10 ez form   Figure the qualified mortgage insurance premiums on the dwelling unit that you could deduct on line 13 of Schedule A as if you had not rented the unit. 10 ez form See the Schedule A instructions. 10 ez form However, figure your adjusted gross income (Form 1040, line 38) without your rental income and expenses from the dwelling unit. 10 ez form See Line 4b to deduct the part of the qualified mortgage insurance premiums not allowed because of the adjusted gross income limit. 10 ez form Include the rental portion of the amount from Schedule A, line 13, in the total you enter on line 2a of the worksheet. 10 ez form   Note. 10 ez form Do not file this Schedule A or use it to figure the amount to deduct on line 13 of that schedule. 10 ez form Instead, figure the personal portion on a separate Schedule A. 10 ez form If you have deducted mortgage interest or qualified mortgage insurance premiums on the dwelling unit on other forms, such as Schedule C or F, remember to reduce your Schedule A deduction by that amount. 10 ez form           Line 2c. 10 ez form Figure the casualty and theft losses related to the dwelling unit that you could deduct on Schedule A as if you had not rented the dwelling unit. 10 ez form To do this, complete Section A of Form 4684, Casualties and Thefts, treating the losses as personal losses. 10 ez form If any of the loss is due to a federally declared disaster, see the Instructions for Form 4684. 10 ez form On Form 4684, line 17, enter 10% of your adjusted gross income figured without your rental income and expenses from the dwelling unit. 10 ez form Enter the rental portion of the result from Form 4684, line 18, on line 2c of this worksheet. 10 ez form   Note. 10 ez form Do not file this Form 4684 or use it to figure your personal losses on Schedule A. 10 ez form Instead, figure the personal portion on a separate Form 4684. 10 ez form           Line 2d. 10 ez form Enter the total of your rental expenses that are directly related only to the rental activity. 10 ez form These include interest on loans used for rental activities other than to buy, build, or improve the dwelling unit. 10 ez form Also include rental agency fees, advertising, office supplies, and depreciation on office equipment used in your rental activity. 10 ez form           Line 2e. 10 ez form You can deduct the amounts on lines 2a, 2b, 2c, and 2d as rental expenses on Schedule E even if your rental expenses are more than your rental income. 10 ez form Enter the amounts on lines 2a, 2b, 2c, and 2d on the appropriate lines of Schedule E. 10 ez form           Line 4b. 10 ez form On line 2a, you entered the rental portion of the mortgage interest and qualified mortgage insurance premiums you could deduct on Schedule A if you had not rented the dwelling unit. 10 ez form If you had additional mortgage interest and qualified mortgage insurance premiums that would not be deductible on Schedule A because of limits imposed on them, enter on line 4b of this worksheet the rental portion of those excess amounts. 10 ez form Do not include interest on a loan that did not benefit the dwelling unit (as explained in the line 2a instructions). 10 ez form           Line 4e. 10 ez form You can deduct the amounts on lines 4a, 4b, and 4c as rental expenses on Schedule E only to the extent they are not more than the amount on line 4e. 10 ez form *           Line 6a. 10 ez form To find the rental portion of excess casualty and theft losses, use the Form 4684 you prepared for line 2c of this worksheet. 10 ez form   A. 10 ez form Enter the amount from Form 4684, line 10       B. 10 ez form Enter the rental portion of line A       C. 10 ez form Enter the amount from line 2c of this worksheet       D. 10 ez form Subtract line C from line B. 10 ez form Enter the result here and on line 6a of this worksheet               Line 6e. 10 ez form You can deduct the amounts on lines 6a, 6b, and 6c as rental expenses on Schedule E only to the extent they are not more than the amount on line 6e. 10 ez form * *Allocating the limited deduction. 10 ez form If you cannot deduct all of the amount on line 4d or 6d this year, you can allocate the allowable deduction in any way you wish among the expenses included on line 4d or 6d. 10 ez form Enter the amount you allocate to each expense on the appropriate line of Schedule E, Part I. 10 ez form Prev  Up  Next   Home   More Online Publications