Expenses for Schedule E
Schedule E (Form 1040) is used to report income or loss from rental real estate, royalties, partnerships, S corporations, trusts, and estates. Properly reporting expenses on Schedule E is essential for accurately calculating your net income or loss from these sources.
Types of Expenses Reportable on Schedule E
- Ordinary and Necessary Expenses: You may deduct ordinary and necessary expenses not listed on lines 5 through 18 on line 19. This includes expenses related to energy-efficient commercial building property or retrofit property placed in service during the tax year (refer to Form 7205 and Rev. Proc. 2024-23 for details).
- Unreimbursed Partnership Expenses: If you are a partner in a partnership, unreimbursed expenses from nonpassive activities must be reported separately in column (i) of line 28. Expenses from passive activities (if not filing Form 8582) should be reported in column (g) of line 28.
- Special Reporting for Depletion or Other Items: If you have items such as depletion, enter a description in column (a) of the same line where you report the income or loss.
Important Notes on Reporting Expenses
- Do not combine or net unreimbursed partnership expenses with other partnership amounts. They must be reported separately.
- For rental real estate, if you are part of a Qualified Use Venture (QUV), you must divide income, deductions, and credits between spouses according to their respective interests. Each spouse reports their share separately on Schedule E.
- Expenses related to self-employment activities (e.g., writing, inventing, art) should be reported on Schedule C, not Schedule E.
- If you have excess business losses, they may be limited and treated as a net operating loss to be carried forward. See the instructions for Form 1040 for details.
Additional Guidance
For detailed instructions on reporting partnership or S corporation income and expenses, refer to the Instructions for Schedule K-1 (Form 1065). Also, consult Publication 541 for basis rules related to partnerships.
Source:
Schedule E (Form 1040) Instructions
Disclaimer: Always verify information with the official IRS Forms and Instructions or your state Department of Revenue. OLT (Online Taxes) provides guidance based on retrieved context and does not guarantee accuracy for individual circumstances.