Schedule E - Supplemental Income and Loss

Schedule E - Supplemental Income and Loss

Schedule E (Form 1040) is used to report supplemental income and loss from various sources, including rental real estate, royalties, partnerships, S corporations, estates, trusts, and REMICs. This form helps taxpayers accurately report income or losses that are not included on the main Form 1040.

Key Uses of Schedule E

• Rental Real Estate and Royalties: Report income or loss from rental properties and royalty payments. Use the same format as shown on Schedule E to attach additional schedules if needed.
• Partnerships and S Corporations: Report your share of income or loss from partnerships or S corporations. This includes income from Schedule K-1 (Form 1065) and must be reported even if not received.
• Estates and Trusts: Beneficiaries of estates or trusts use Part III of Schedule E to report their share of income or loss, based on information from Schedule K-1 (Form 1041).
• REMICs: REMIC income or loss is not considered passive. If you hold a regular interest in a REMIC, report income on Form 1040 or 1040-SR, line 2b, not on Schedule E.

Reporting Requirements

• Enter total income and total loss for each part separately. Losses should be enclosed in parentheses.
• For each item, provide a description in column (a) (e.g., depletion).
• If you have more space needed in Part II or III, attach a continuation sheet using the same format.
• For nonpassive income or loss, report current-year ordinary income or loss after applying any special rules that limit losses.

Special Considerations

• Excess Business Losses: If you report a loss from a partnership or S corporation engaged in a trade or business, use Form 461 to calculate excess business loss. The excess loss is added to income on Schedule 1 (Form 1040), line 8p, and carried forward as a net operating loss.
• Gambling Income/Loss: If the partnership was engaged in gambling, report winnings on Schedule E, line 28, column (k), and losses on column (i). Losses are deductible only to the extent of winnings.
• Self-Employment Income: Part of your partnership income may be considered net earnings from self-employment. Report this amount on Schedule SE after reducing it by allowable expenses.

Additional Forms to Consider

• Form 8582: For limitations on passive activity losses.
• Form 8824: For like-kind exchanges.
• Form 8960: To pay Net Investment Income Tax on rental and passive income.

Source:

Schedule E (Form 1040) Instructions

Disclaimer: Always verify information with official Federal or State Department of Revenue Forms and Instructions.