Net Rental Income: Form 1040 Schedule E
This form allows you to file for net income computation of up to three properties. The depreciation computation of form 4562 is an input to this form and it therefore needs to be filled first. Only part I needs to be filled for property income.
- the property manager must send to you and the IRS the total rent received for the year in the form 1042-S (1099-MISC if the manager mistakenly used a form for tax residents).
- the property manager is normally able to send a detail of all property expenses for the tax year, split between management, cleaning, utilities, repairs, etc. It is a good idea to agree with her that there are 14 categories of expense for IRS filing purpose, and that the property report should use them.
- you should record the cost of any insurance, local taxes, and mortgages born by you during the tax year as well.