Question about taxes

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Question about taxes

Account Closed
Investor · Baton Rouge, LA · Member since 2016 · 17 posts · 6 votes

Last year I needed to move in with my mother to take care of her. I rented out my condo. I do not have a business set up. My question is how do I prepare to pay taxes on the income I have earned? Do I need to set up a business? I was thinking no. I hate to itemize stuff, but if it's necessary I could. With the new double standard deduction, I might still come out ahead by not itemizing. I really have no clue. Could anyone post some ideas as to how they'd do it? Do I just need to see a CPA, or can I do it myself simply?

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Jon Holdman
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
8y

No, you don't need to set up a business.  

Rental properties are unrelated to itemizing or the standard deduction.  All the income and expenses for rental properties go on schedule E, and then the net income goes on 1040.

I highly recommend using an accountant, especially in a complex situation like this where you've converted a residence into a rental.

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  • Jon Holdman
    Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
    8y

    No, you don't need to set up a business.  

    Rental properties are unrelated to itemizing or the standard deduction.  All the income and expenses for rental properties go on schedule E, and then the net income goes on 1040.

    I highly recommend using an accountant, especially in a complex situation like this where you've converted a residence into a rental.

    2Reply
  • Natalie KolodijBusiness Member
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    Tax Strategist| National Tax Educator| Accepting New Clients · Member since 2014 · 3k+ posts · 4k+ votes
    8y

    @Account Closed

    If it's been moved to being a rental that's now on Schedule E not A- and with the new double standard deduction, he's more likely to not itemize this year for sure. 

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  • Jon Holdman
    Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
    8y

    @Natalie Kolodij true enough this may affect his itemized deductions.  My point was that it is breaking out all the details of the rental income and expense is required, whether you itemize or not.

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  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    8y

    Also the double standard deduction doesnt go into effect for filing 2017 taxes.

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  • Bettina F.
    Investor · Post Falls, ID · Member since 2016 · 606 posts · 699 votes
    8y

    Just buy the next higher version of Turbo Tax or Tax Cut above the basic version -- check on line or the back of the box to make sure this version includes rental property.  The program will walk you through it.  Save your receipts from the date it was put into service as a rental.

    I always did my own taxes when I just had one unit.  Start early, as the program will prompt you for necessary information that you might need time to gather.   It was easy.

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  • Basit SiddiqiBusiness Member
    Accountant · New York, NY · Member since 2015 · 8k+ posts · 3k+ votes
    8y

    @Account Closed

    You do not need to create an entity to report rental income. However, you should look into the tax laws of Baton Rouge. Some cities require owners of rental properties to "register" the property with the city or have some type of business license. This is just the city trying to get extra revenue for the city.

    In regards to converting the condo from a personal residence to a rental property.
    Items such as real estate taxes and mortgage interest will be Schedule A(itemized deductions) for the part of the year that it was a personal residence.
    It will be deductions against your rental income from the time it was a rental property.
    You are also entitled to take other deductions which were required to maintain the property.

    The new "double" standard deduction relates to 2018. 

    I hope your mom is in good health!

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  • Account Closed
    OP
    Investor · Baton Rouge, LA · Member since 2016 · 17 posts · 6 votes
    8y

    Thank you all, for the information!

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