First Time Filing Taxes

7 Replies

I purchased my first property this year and I am researching how I should file taxes next year. My property is operated under my LLC and I use business banking accounts. Can anyone share their method for filing taxes? Do you use tax software or pay a CPA? Any advice is greatly appreciated.

@Kenny Rains

Congrats on acquiring a rental property!

Some people will prepare their own returns; others will suggest that you hire a CPA. 

A CPA should be able to do the following 3 things for you

1) Provide you tax advice/strategies
2) save you time from having to prepare your tax return; It can take several hours reading through new changes in tax law, reading tax form instructions and actually filling out the forms
3) provide you assurance that you took deductions that you were entitled to. How often will you prepare your return and unsure if you prepared it correctly or if you were entitled to more deductions.

With that said - If you are looking to prepare your return yourself; I can provide you some guidance on how to do so.

Is your LLC a single member LLC or a multi-member LLC?
If the LLC is a single member LLC and you didnt elect to be taxed as a corporation - you will report the rental income on schedule E.
Is the property located in VA? If it is - it should be business as normal - you will file a VA resident state tax return.
If the property is located outside of VA - you will prepare a nonresident state tax return in the state where the property is located in and file a VA resident state tax return. If you paid any taxes to the other state; you may be entitled to a credit on your VA tax return.

Let me know if you have any follow-up questions.

@Basit Siddiqi my LLC is a multi-member LLC as my wife and I are joint owners. The property and LLC are both in Virginia. I will most likely continue with my search on finding a CPA as this process is still new to me. Since we are small right now we have elected to be taxed as a pass-through partnership.

@Basit Siddiqi we planned to report our REI income for the LLC on our personal returns instead of filling a return for the LLC. From my research this is the best course of action as our REI portfolio is small and we do not have any employees. Thanks for your feedback.

Originally posted by @Basit Siddiqi :

@Kenny Rains

Congrats on acquiring a rental property!

Some people will prepare their own returns; others will suggest that you hire a CPA

A CPA should be able to do the following 3 things for you

1) Provide you tax advice/strategies
2) save you time from having to prepare your tax return; It can take several hours reading through new changes in tax law, reading tax form instructions and actually filling out the forms
3) provide you assurance that you took deductions that you were entitled to. How often will you prepare your return and unsure if you prepared it correctly or if you were entitled to more deductions.

With that said - If you are looking to prepare your return yourself; I can provide you some guidance on how to do so.

Is your LLC a single member LLC or a multi-member LLC?
If the LLC is a single member LLC and you didnt elect to be taxed as a corporation - you will report the rental income on schedule E.
Is the property located in VA? If it is - it should be business as normal - you will file a VA resident state tax return.
If the property is located outside of VA - you will prepare a nonresident state tax return in the state where the property is located in and file a VA resident state tax return. If you paid any taxes to the other state; you may be entitled to a credit on your VA tax return.

Let me know if you have any follow-up questions.

thanks for the explanation!

Originally posted by @Basit Siddiqi :

@Kenny Rains

Congrats on acquiring a rental property!

Some people will prepare their own returns; others will suggest that you hire a CPA. 

A CPA should be able to do the following 3 things for you

1) Provide you tax advice/strategies
2) save you time from having to prepare your tax return; It can take several hours reading through new changes in tax law, reading tax form instructions and actually filling out the forms
3) provide you assurance that you took deductions that you were entitled to. How often will you prepare your return and unsure if you prepared it correctly or if you were entitled to more deductions.

With that said - If you are looking to prepare your return yourself; I can provide you some guidance on how to do so.

Is your LLC a single member LLC or a multi-member LLC?
If the LLC is a single member LLC and you didnt elect to be taxed as a corporation - you will report the rental income on schedule E.
Is the property located in VA? If it is - it should be business as normal - you will file a VA resident state tax return.
If the property is located outside of VA - you will prepare a nonresident state tax return in the state where the property is located in and file a VA resident state tax return. If you paid any taxes to the other state; you may be entitled to a credit on your VA tax return.
https://loveandcarry.com/en/sh... mei tai, Let me know if you have any follow-up questions.

 Yes, you were right to prioritize

@Kenny Rains

Keep good records, spreadsheets, management software, and hand it all over to a cpa. You ever see a K-1? Pay the $400-500, or whatever it is, and let a cpa do it right.