U.S. Taxes for Worldly Americans: The Traveling Expat's Guide to Living, Working, and Staying Tax Compliant Abroad (Updated for 2019) by Olivier Wagner

Author:Olivier Wagner [Wagner, Olivier]
Language: eng
Format: azw3
Publisher: Identity Publications
Published: 2017-01-31T16:00:00+00:00

SCHEDULE E

Schedule E is used to report rental income on a home or building or receive royalties or income from a partnership, S corporation, trust or estate. You must report all income and expenses incurred during the tax year and attach it to your personal tax return.

Bear in mind that individuals, estates, and trusts might also cause you to pay the Net Investment Income Tax (NIIT), which is 3.8% of the lesser of the net investment income or the excess of modified adjusted income. Net investment includes rental and royalty income, as well as partnership or S corporation income. To determine your net investment tax, use Form 8960.

Schedule E is the most commonly used to report rental properties income. You might be subject to self-employment tax if you manage rental properties as your main business activities. In this case, you will have to file Schedule C instead of Schedule E.

Let’s look at how to complete Schedule E.

The first part is concerned with the details of the rental property, its address, the number of days it has been rented out, the type of property it is, and the amount of income collected. You should also report here the income from any royalties you have received.

Expenses are reported on lines 5 through to 20 for each property in the appropriate column. You can deduct taxes, interest, repair, insurance, management fees, depreciation, etc. In general, all ordinary and necessary expenses are deductible. However, you cannot deduct the value of your own labor or investments in the property (the later will be depreciated over a period).

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