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1040ez Irs Form

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1040ez Irs Form

1040ez irs form 6. 1040ez irs form   How To Figure Cost of Goods Sold Table of Contents Introduction Figuring Cost of Goods Sold on Schedule C, Lines 35 Through 42Line 35 Inventory at Beginning of Year Line 36 Purchases Less Cost of Items Withdrawn for Personal Use Line 37 Cost of Labor Line 38 Materials and Supplies Line 39 Other Costs Line 40 Add Lines 35 through 39 Line 41 Inventory at End of Year Line 42 Cost of Goods Sold Introduction If you make or buy goods to sell, you can deduct the cost of goods sold from your gross receipts on Schedule C. 1040ez irs form However, to determine these costs, you must value your inventory at the beginning and end of each tax year. 1040ez irs form This chapter applies to you if you are a manufacturer, wholesaler, or retailer or if you are engaged in any business that makes, buys, or sells goods to produce income. 1040ez irs form This chapter does not apply to a personal service business, such as the business of a doctor, lawyer, carpenter, or painter. 1040ez irs form However, if you work in a personal service business and also sell or charge for the materials and supplies normally used in your business, this chapter applies to you. 1040ez irs form If you must account for an inventory in your business, you must generally use an accrual method of accounting for your purchases and sales. 1040ez irs form For more information, see chapter 2. 1040ez irs form Figuring Cost of Goods Sold on Schedule C, Lines 35 Through 42 Figure your cost of goods sold by filling out lines 35 through 42 of Schedule C. 1040ez irs form These lines are reproduced below and are explained in the discussion that follows. 1040ez irs form 35 Inventory at beginning of year. 1040ez irs form If different from last year's closing inventory, attach explanation   36 Purchases less cost of items withdrawn for personal use   37 Cost of labor. 1040ez irs form Do not include any amounts paid to yourself   38 Materials and supplies   39 Other costs   40 Add lines 35 through 39   41 Inventory at end of year   42 Cost of goods sold. 1040ez irs form Subtract line 41 from line 40. 1040ez irs form  Enter the result here and on line 4   Line 35 Inventory at Beginning of Year If you are a merchant, beginning inventory is the cost of merchandise on hand at the beginning of the year that you will sell to customers. 1040ez irs form If you are a manufacturer or producer, it includes the total cost of raw materials, work in process, finished goods, and materials and supplies used in manufacturing the goods (see Inventories in chapter 2). 1040ez irs form Opening inventory usually will be identical to the closing inventory of the year before. 1040ez irs form You must explain any difference in a schedule attached to your return. 1040ez irs form Donation of inventory. 1040ez irs form   If you contribute inventory (property that you sell in the course of your business), the amount you can claim as a contribution deduction is the smaller of its fair market value on the day you contributed it or its basis. 1040ez irs form The basis of donated inventory is any cost incurred for the inventory in an earlier year that you would otherwise include in your opening inventory for the year of the contribution. 1040ez irs form You must remove the amount of your contribution deduction from your opening inventory. 1040ez irs form It is not part of the cost of goods sold. 1040ez irs form   If the cost of donated inventory is not included in your opening inventory, the inventory's basis is zero and you cannot claim a charitable contribution deduction. 1040ez irs form Treat the inventory's cost as you would ordinarily treat it under your method of accounting. 1040ez irs form For example, include the purchase price of inventory bought and donated in the same year in the cost of goods sold for that year. 1040ez irs form   A special rule may apply to certain donations of food inventory. 1040ez irs form See Publication 526, Charitable Contributions. 1040ez irs form Example 1. 1040ez irs form You are a calendar year taxpayer who uses an accrual method of accounting. 1040ez irs form In 2013, you contributed property from inventory to a church. 1040ez irs form It had a fair market value of $600. 1040ez irs form The closing inventory at the end of 2012 properly included $400 of costs due to the acquisition of the property, and in 2012, you properly deducted $50 of administrative and other expenses attributable to the property as business expenses. 1040ez irs form The charitable contribution allowed for 2013 is $400 ($600 − $200). 1040ez irs form The $200 is the amount that would be ordinary income if you had sold the contributed inventory at fair market value on the date of the gift. 1040ez irs form The cost of goods sold you use in determining gross income for 2013 must not include the $400. 1040ez irs form You remove that amount from opening inventory for 2013. 1040ez irs form Example 2. 1040ez irs form If, in Example 1, you acquired the contributed property in 2013 at a cost of $400, you would include the $400 cost of the property in figuring the cost of goods sold for 2013 and deduct the $50 of administrative and other expenses attributable to the property for that year. 1040ez irs form You would not be allowed any charitable contribution deduction for the contributed property. 1040ez irs form Line 36 Purchases Less Cost of Items Withdrawn for Personal Use If you are a merchant, use the cost of all merchandise you bought for sale. 1040ez irs form If you are a manufacturer or producer, this includes the cost of all raw materials or parts purchased for manufacture into a finished product. 1040ez irs form Trade discounts. 1040ez irs form   The differences between the stated prices of articles and the actual prices you pay for them are called trade discounts. 1040ez irs form You must use the prices you pay (not the stated prices) in figuring your cost of purchases. 1040ez irs form Do not show the discount amount separately as an item in gross income. 1040ez irs form   An automobile dealer must record the cost of a car in inventory reduced by any manufacturer's rebate that represents a trade discount. 1040ez irs form Cash discounts. 1040ez irs form   Cash discounts are amounts your suppliers let you deduct from your purchase invoices for prompt payments. 1040ez irs form There are two methods of accounting for cash discounts. 1040ez irs form You can either credit them to a separate discount account or deduct them from total purchases for the year. 1040ez irs form Whichever method you use, you must be consistent. 1040ez irs form If you want to change your method of figuring inventory cost, you must file Form 3115, Application for Change in Accounting Method. 1040ez irs form For more information, see Change in Accounting Method in chapter 2. 1040ez irs form   If you credit cash discounts to a separate account, you must include this credit balance in your business income at the end of the tax year. 1040ez irs form If you use this method, do not reduce your cost of goods sold by the cash discounts. 1040ez irs form Purchase returns and allowances. 1040ez irs form   You must deduct all returns and allowances from your total purchases during the year. 1040ez irs form Merchandise withdrawn from sale. 1040ez irs form   If you withdraw merchandise for your personal or family use, you must exclude this cost from the total amount of merchandise you bought for sale. 1040ez irs form Do this by crediting the purchases or sales account with the cost of merchandise you withdraw for personal use. 1040ez irs form You must also charge the amount to your drawing account. 1040ez irs form   A drawing account is a separate account you should keep to record the business income you withdraw to pay for personal and family expenses. 1040ez irs form As stated above, you also use it to record withdrawals of merchandise for personal or family use. 1040ez irs form This account is also known as a “withdrawals account” or “personal account. 1040ez irs form ” Line 37 Cost of Labor Labor costs are usually an element of cost of goods sold only in a manufacturing or mining business. 1040ez irs form Small merchandisers (wholesalers, retailers, etc. 1040ez irs form ) usually do not have labor costs that can properly be charged to cost of goods sold. 1040ez irs form In a manufacturing business, labor costs properly allocable to the cost of goods sold include both the direct and indirect labor used in fabricating the raw material into a finished, saleable product. 1040ez irs form Direct labor. 1040ez irs form   Direct labor costs are the wages you pay to those employees who spend all their time working directly on the product being manufactured. 1040ez irs form They also include a part of the wages you pay to employees who work directly on the product part time if you can determine that part of their wages. 1040ez irs form Indirect labor. 1040ez irs form   Indirect labor costs are the wages you pay to employees who perform a general factory function that does not have any immediate or direct connection with making the saleable product, but that is a necessary part of the manufacturing process. 1040ez irs form Other labor. 1040ez irs form   Other labor costs not properly chargeable to the cost of goods sold can be deducted as selling or administrative expenses. 1040ez irs form Generally, the only kinds of labor costs properly chargeable to your cost of goods sold are the direct or indirect labor costs and certain other costs treated as overhead expenses properly charged to the manufacturing process, as discussed later under Line 39 Other Costs. 1040ez irs form Line 38 Materials and Supplies Materials and supplies, such as hardware and chemicals, used in manufacturing goods are charged to cost of goods sold. 1040ez irs form Those that are not used in the manufacturing process are treated as deferred charges. 1040ez irs form You deduct them as a business expense when you use them. 1040ez irs form Business expenses are discussed in chapter 8. 1040ez irs form Line 39 Other Costs Examples of other costs incurred in a manufacturing or mining process that you charge to your cost of goods sold are as follows. 1040ez irs form Containers. 1040ez irs form   Containers and packages that are an integral part of the product manufactured are a part of your cost of goods sold. 1040ez irs form If they are not an integral part of the manufactured product, their costs are shipping or selling expenses. 1040ez irs form Freight-in. 1040ez irs form   Freight-in, express-in, and cartage-in on raw materials, supplies you use in production, and merchandise you purchase for sale are all part of cost of goods sold. 1040ez irs form Overhead expenses. 1040ez irs form   Overhead expenses include expenses such as rent, heat, light, power, insurance, depreciation, taxes, maintenance, labor, and supervision. 1040ez irs form The overhead expenses you have as direct and necessary expenses of the manufacturing operation are included in your cost of goods sold. 1040ez irs form Line 40 Add Lines 35 through 39 The total of lines 35 through 39 equals the cost of the goods available for sale during the year. 1040ez irs form Line 41 Inventory at End of Year Subtract the value of your closing inventory (including, as appropriate, the allocable parts of the cost of raw materials and supplies, direct labor, and overhead expenses) from line 40. 1040ez irs form Inventory at the end of the year is also known as closing or ending inventory. 1040ez irs form Your ending inventory will usually become the beginning inventory of your next tax year. 1040ez irs form Line 42 Cost of Goods Sold When you subtract your closing inventory (inventory at the end of the year) from the cost of goods available for sale, the remainder is your cost of goods sold during the tax year. 1040ez irs form Prev  Up  Next   Home   More Online Publications
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The 1040ez Irs Form

1040ez irs form 3. 1040ez irs form   Reporting Rental Income, Expenses, and Losses Table of Contents Which Forms To UseSchedule E (Form 1040) Schedule C (Form 1040), Profit or Loss From Business Qualified Joint Venture Limits on Rental LossesAt-Risk Rules Passive Activity Limits Casualties and Thefts Example Figuring the net income or loss for a residential rental activity may involve more than just listing the income and deductions on Schedule E (Form 1040). 1040ez irs form There are activities which do not qualify to use Schedule E, such as when the activity is not engaged in to make a profit or when you provide substantial services in conjunction with the property. 1040ez irs form There are also the limitations which may need to be applied if you have a net loss on Schedule E. 1040ez irs form There are two: (1) the limitation based on the amount of investment you have at risk in your rental activity, and (2) the special limits imposed on passive activities. 1040ez irs form You may also have a gain or loss related to your rental property from a casualty or theft. 1040ez irs form This is considered separately from the income and expense information you report on Schedule E. 1040ez irs form Which Forms To Use The basic form for reporting residential rental income and expenses is Schedule E (Form 1040). 1040ez irs form However, do not use that schedule to report a not-for-profit activity. 1040ez irs form See Not Rented for Profit , in chapter 4. 1040ez irs form There are also other rental situations in which forms other than Schedule E would be used. 1040ez irs form Schedule E (Form 1040) If you rent buildings, rooms, or apartments, and provide basic services such as heat and light, trash collection, etc. 1040ez irs form , you normally report your rental income and expenses on Schedule E, Part I. 1040ez irs form List your total income, expenses, and depreciation for each rental property. 1040ez irs form Be sure to enter the number of fair rental and personal use days on line 2. 1040ez irs form If you have more than three rental or royalty properties, complete and attach as many Schedules E as are needed to list the properties. 1040ez irs form Complete lines 1 and 2 for each property. 1040ez irs form However, fill in lines 23a through 26 on only one Schedule E. 1040ez irs form On Schedule E, page 1, line 18, enter the depreciation you are claiming for each property. 1040ez irs form To find out if you need to attach Form 4562, see Form 4562 , later. 1040ez irs form If you have a loss from your rental real estate activity, you also may need to complete one or both of the following forms. 1040ez irs form Form 6198, At-Risk Limitations. 1040ez irs form See At-Risk Rules , later. 1040ez irs form Also see Publication 925. 1040ez irs form Form 8582, Passive Activity Loss Limitations. 1040ez irs form See Passive Activity Limits , later. 1040ez irs form Page 2 of Schedule E is used to report income or loss from partnerships, S corporations, estates, trusts, and real estate mortgage investment conduits. 1040ez irs form If you need to use page 2 of Schedule E, be sure to use page 2 of the same Schedule E you used to enter your rental activity on page 1. 1040ez irs form Also, include the amount from line 26 (Part I) in the “Total income or (loss)” on line 41 (Part V). 1040ez irs form Form 4562. 1040ez irs form   You must complete and attach Form 4562 for rental activities only if you are claiming: Depreciation, including the special depreciation allowance, on property placed in service during 2013; Depreciation on listed property (such as a car), regardless of when it was placed in service; or Any other car expenses, including the standard mileage rate or lease expenses. 1040ez irs form Otherwise, figure your depreciation on your own worksheet. 1040ez irs form You do not have to attach these computations to your return, but you should keep them in your records for future reference. 1040ez irs form   See Publication 946 for information on preparing Form 4562. 1040ez irs form Schedule C (Form 1040), Profit or Loss From Business Generally, Schedule C is used when you provide substantial services in conjunction with the property or the rental is part of a trade or business as a real estate dealer. 1040ez irs form Providing substantial services. 1040ez irs form   If you provide substantial services that are primarily for your tenant's convenience, such as regular cleaning, changing linen, or maid service, you report your rental income and expenses on Schedule C (Form 1040), Profit or Loss From Business, or Schedule C-EZ (Form 1040), Net Profit From Business. 1040ez irs form Use Form 1065, U. 1040ez irs form S. 1040ez irs form Return of Partnership Income, if your rental activity is a partnership (including a partnership with your spouse unless it is a qualified joint venture). 1040ez irs form Substantial services do not include the furnishing of heat and light, cleaning of public areas, trash collection, etc. 1040ez irs form For information, see Publication 334, Tax Guide for Small Business. 1040ez irs form Also, you may have to pay self-employment tax on your rental income using Schedule SE (Form 1040), Self-Employment Tax. 1040ez irs form For a discussion of “substantial services,” see Real Estate Rents in Publication 334, chapter 5. 1040ez irs form Qualified Joint Venture If you and your spouse each materially participate (see Material participation under Passive Activity Limits, later) as the only members of a jointly owned and operated real estate business, and you file a joint return for the tax year, you can make a joint election to be treated as a qualified joint venture instead of a partnership. 1040ez irs form This election, in most cases, will not increase the total tax owed on the joint return, but it does give each of you credit for social security earnings on which retirement benefits are based and for Medicare coverage if your rental income is subject to self-employment tax. 1040ez irs form If you make this election, you must report rental real estate income on Schedule E (or Schedule C if you provide substantial services). 1040ez irs form You will not be required to file Form 1065 for any year the election is in effect. 1040ez irs form Rental real estate income generally is not included in net earnings from self-employment subject to self-employment tax and generally is subject to the passive activity limits. 1040ez irs form If you and your spouse filed a Form 1065 for the year prior to the election, the partnership terminates at the end of the tax year immediately preceding the year the election takes effect. 1040ez irs form For more information on qualified joint ventures, go to IRS. 1040ez irs form gov and enter “qualified joint venture” in the search box. 1040ez irs form Limits on Rental Losses If you have a loss from your rental real estate activity, two sets of rules may limit the amount of loss you can deduct. 1040ez irs form You must consider these rules in the order shown below. 1040ez irs form Both are discussed in this section. 1040ez irs form At-risk rules. 1040ez irs form These rules are applied first if there is investment in your rental real estate activity for which you are not at risk. 1040ez irs form This applies only if the real property was placed in service after 1986. 1040ez irs form Passive activity limits. 1040ez irs form Generally, rental real estate activities are considered passive activities and losses are not deductible unless you have income from other passive activities to offset them. 1040ez irs form However, there are exceptions. 1040ez irs form At-Risk Rules You may be subject to the at-risk rules if you have: A loss from an activity carried on as a trade or business or for the production of income, and Amounts invested in the activity for which you are not fully at risk. 1040ez irs form Losses from holding real property (other than mineral property) placed in service before 1987 are not subject to the at-risk rules. 1040ez irs form In most cases, any loss from an activity subject to the at-risk rules is allowed only to the extent of the total amount you have at risk in the activity at the end of the tax year. 1040ez irs form You are considered at risk in an activity to the extent of cash and the adjusted basis of other property you contributed to the activity and certain amounts borrowed for use in the activity. 1040ez irs form Any loss that is disallowed because of the at-risk limits is treated as a deduction from the same activity in the next tax year. 1040ez irs form See Publication 925 for a discussion of the at-risk rules. 1040ez irs form Form 6198. 1040ez irs form   If you are subject to the at-risk rules, file Form 6198, At-Risk Limitations, with your tax return. 1040ez irs form Passive Activity Limits In most cases, all rental real estate activities (except those of certain real estate professionals, discussed later) are passive activities. 1040ez irs form For this purpose, a rental activity is an activity from which you receive income mainly for the use of tangible property, rather than for services. 1040ez irs form For a discussion of activities that are not considered rental activities, see Rental Activities in Publication 925. 1040ez irs form Deductions or losses from passive activities are limited. 1040ez irs form You generally cannot offset income, other than passive income, with losses from passive activities. 1040ez irs form Nor can you offset taxes on income, other than passive income, with credits resulting from passive activities. 1040ez irs form Any excess loss or credit is carried forward to the next tax year. 1040ez irs form Exceptions to the rules for figuring passive activity limits for personal use of a dwelling unit and for rental real estate with active participation are discussed later. 1040ez irs form For a detailed discussion of these rules, see Publication 925. 1040ez irs form Real estate professionals. 1040ez irs form   If you are a real estate professional, complete line 43 of Schedule E. 1040ez irs form      You qualify as a real estate professional for the tax year if you meet both of the following requirements. 1040ez irs form More than half of the personal services you perform in all trades or businesses during the tax year are performed in real property trades or businesses in which you materially participate. 1040ez irs form You perform more than 750 hours of services during the tax year in real property trades or businesses in which you materially participate. 1040ez irs form If you qualify as a real estate professional, rental real estate activities in which you materially participated are not passive activities. 1040ez irs form For purposes of determining whether you materially participated in your rental real estate activities, each interest in rental real estate is a separate activity unless you elect to treat all your interests in rental real estate as one activity. 1040ez irs form   Do not count personal services you perform as an employee in real property trades or businesses unless you are a 5% owner of your employer. 1040ez irs form You are a 5% owner if you own (or are considered to own) more than 5% of your employer's outstanding stock, or capital or profits interest. 1040ez irs form   Do not count your spouse's personal services to determine whether you met the requirements listed earlier to qualify as a real estate professional. 1040ez irs form However, you can count your spouse's participation in an activity in determining if you materially participated. 1040ez irs form Real property trades or businesses. 1040ez irs form   A real property trade or business is a trade or business that does any of the following with real property. 1040ez irs form Develops or redevelops it. 1040ez irs form Constructs or reconstructs it. 1040ez irs form Acquires it. 1040ez irs form Converts it. 1040ez irs form Rents or leases it. 1040ez irs form Operates or manages it. 1040ez irs form Brokers it. 1040ez irs form Choice to treat all interests as one activity. 1040ez irs form   If you were a real estate professional and had more than one rental real estate interest during the year, you can choose to treat all the interests as one activity. 1040ez irs form You can make this choice for any year that you qualify as a real estate professional. 1040ez irs form If you forgo making the choice for one year, you can still make it for a later year. 1040ez irs form   If you make the choice, it is binding for the tax year you make it and for any later year that you are a real estate professional. 1040ez irs form This is true even if you are not a real estate professional in any intervening year. 1040ez irs form (For that year, the exception for real estate professionals will not apply in determining whether your activity is subject to the passive activity rules. 1040ez irs form )   See the Instructions for Schedule E for information about making this choice. 1040ez irs form Material participation. 1040ez irs form   Generally, you materially participated in an activity for the tax year if you were involved in its operations on a regular, continuous, and substantial basis during the year. 1040ez irs form For details, see Publication 925 or the Instructions for Schedule C. 1040ez irs form Participating spouse. 1040ez irs form   If you are married, determine whether you materially participated in an activity by also counting any participation in the activity by your spouse during the year. 1040ez irs form Do this even if your spouse owns no interest in the activity or files a separate return for the year. 1040ez irs form Form 8582. 1040ez irs form    You may have to complete Form 8582 to figure the amount of any passive activity loss for the current tax year for all activities and the amount of the passive activity loss allowed on your tax return. 1040ez irs form See Form 8582 not required , later in this chapter, to determine if you must complete Form 8582. 1040ez irs form   If you are required to complete Form 8582 and are also subject to the at-risk rules, include the amount from Form 6198, line 21 (deductible loss) in column (b) of Form 8582, Worksheet 1 or 3, as required. 1040ez irs form Exception for Personal Use of Dwelling Unit If you used the rental property as a home during the year, any income, deductions, gain, or loss allocable to such use shall not be taken into account for purposes of the passive activity loss limitation. 1040ez irs form Instead, follow the rules explained in chapter 5, Personal Use of Dwelling Unit (Including Vacation Home). 1040ez irs form Exception for Rental Real Estate With Active Participation If you or your spouse actively participated in a passive rental real estate activity, you may be able to deduct up to $25,000 of loss from the activity from your nonpassive income. 1040ez irs form This special allowance is an exception to the general rule disallowing losses in excess of income from passive activities. 1040ez irs form Similarly, you may be able to offset credits from the activity against the tax on up to $25,000 of nonpassive income after taking into account any losses allowed under this exception. 1040ez irs form Example. 1040ez irs form Jane is single and has $40,000 in wages, $2,000 of passive income from a limited partnership, and $3,500 of passive loss from a rental real estate activity in which she actively participated. 1040ez irs form $2,000 of Jane's $3,500 loss offsets her passive income. 1040ez irs form The remaining $1,500 loss can be deducted from her $40,000 wages. 1040ez irs form The special allowance is not available if you were married, lived with your spouse at any time during the year, and are filing a separate return. 1040ez irs form Active participation. 1040ez irs form   You actively participated in a rental real estate activity if you (and your spouse) owned at least 10% of the rental property and you made management decisions or arranged for others to provide services (such as repairs) in a significant and bona fide sense. 1040ez irs form Management decisions that may count as active participation include approving new tenants, deciding on rental terms, approving expenditures, and other similar decisions. 1040ez irs form Example. 1040ez irs form Mike is single and had the following income and losses during the tax year:   Salary $42,300     Dividends 300     Interest 1,400     Rental loss (4,000)   The rental loss was from the rental of a house Mike owned. 1040ez irs form Mike had advertised and rented the house to the current tenant himself. 1040ez irs form He also collected the rents, which usually came by mail. 1040ez irs form All repairs were either made or contracted out by Mike. 1040ez irs form Although the rental loss is from a passive activity, because Mike actively participated in the rental property management he can use the entire $4,000 loss to offset his other income. 1040ez irs form Maximum special allowance. 1040ez irs form   The maximum special allowance is: $25,000 for single individuals and married individuals filing a joint return for the tax year, $12,500 for married individuals who file separate returns for the tax year and lived apart from their spouses at all times during the tax year, and $25,000 for a qualifying estate reduced by the special allowance for which the surviving spouse qualified. 1040ez irs form   If your modified adjusted gross income (MAGI) is $100,000 or less ($50,000 or less if married filing separately), you can deduct your loss up to the amount specified above. 1040ez irs form If your MAGI is more than $100,000 (more than $50,000 if married filing separately), your special allowance is limited to 50% of the difference between $150,000 ($75,000 if married filing separately) and your MAGI. 1040ez irs form   Generally, if your MAGI is $150,000 or more ($75,000 or more if you are married filing separately), there is no special allowance. 1040ez irs form Modified adjusted gross income (MAGI). 1040ez irs form   This is your adjusted gross income from Form 1040, U. 1040ez irs form S. 1040ez irs form Individual Income Tax Return, line 38, or Form 1040NR, U. 1040ez irs form S. 1040ez irs form Nonresident Alien Income Tax Return, line 37, figured without taking into account: The taxable amount of social security or equivalent tier 1 railroad retirement benefits, The deductible contributions to traditional individual retirement accounts (IRAs) and section 501(c)(18) pension plans, The exclusion from income of interest from Series EE and I U. 1040ez irs form S. 1040ez irs form savings bonds used to pay higher educational expenses, The exclusion of amounts received under an employer's adoption assistance program, Any passive activity income or loss included on Form 8582, Any rental real estate loss allowed to real estate professionals, Any overall loss from a publicly traded partnership (see Publicly Traded Partnerships (PTPs) in the Instructions for Form 8582), The deduction allowed for one-half of self-employment tax, The deduction allowed for interest paid on student loans, The deduction for qualified tuition and related fees, and The domestic production activities deduction (see the Instructions for Form 8903). 1040ez irs form Form 8582 not required. 1040ez irs form   Do not complete Form 8582 if you meet all of the following conditions. 1040ez irs form Your only passive activities were rental real estate activities in which you actively participated. 1040ez irs form Your overall net loss from these activities is $25,000 or less ($12,500 or less if married filing separately and you lived apart from your spouse all year). 1040ez irs form If married filing separately, you lived apart from your spouse all year. 1040ez irs form You have no prior year unallowed losses from these (or any other passive) activities. 1040ez irs form You have no current or prior year unallowed credits from passive activities. 1040ez irs form Your MAGI is $100,000 or less ($50,000 or less if married filing separately and you lived apart from your spouse all year). 1040ez irs form You do not hold any interest in a rental real estate activity as a limited partner or as a beneficiary of an estate or a trust. 1040ez irs form   If you meet all of the conditions listed above, your rental real estate activities are not limited by the passive activity rules and you do not have to complete Form 8582. 1040ez irs form On lines 23a through 23e of your Schedule E, enter the applicable amounts. 1040ez irs form Casualties and Thefts As a result of a casualty or theft, you may have a loss related to your rental property. 1040ez irs form You may be able to deduct the loss on your income tax return. 1040ez irs form Casualty. 1040ez irs form   This is the damage, destruction, or loss of property resulting from an identifiable event that is sudden, unexpected, or unusual. 1040ez irs form Such events include a storm, fire, or earthquake. 1040ez irs form Theft. 1040ez irs form   This is defined as the unlawful taking and removing of your money or property with the intent to deprive you of it. 1040ez irs form Gain from casualty or theft. 1040ez irs form   It is also possible to have a gain from a casualty or theft if you receive money, including insurance, that is more than your adjusted basis in the property. 1040ez irs form Generally, you must report this gain. 1040ez irs form However, under certain circumstances, you may defer paying tax by choosing to postpone reporting the gain. 1040ez irs form To do this, you generally must buy replacement property within 2 years after the close of the first tax year in which any part of your gain is realized. 1040ez irs form In certain circumstances, the replacement period can be greater than 2 years; see Replacement Period in Publication 547 for more information. 1040ez irs form The cost of the replacement property must be equal to or more than the net insurance or other payment you received. 1040ez irs form More information. 1040ez irs form   For information on business and nonbusiness casualty and theft losses, see Publication 547. 1040ez irs form How to report. 1040ez irs form    If you had a casualty or theft that involved property used in your rental activity, figure the net gain or loss in Section B of Form 4684, Casualties and Thefts. 1040ez irs form Follow the Instructions for Form 4684 for where to carry your net gain or loss. 1040ez irs form Example In February 2008, Marie Pfister bought a rental house for $135,000 (house $120,000 and land $15,000) and immediately began renting it out. 1040ez irs form In 2013, she rented it all 12 months for a monthly rental fee of $1,125. 1040ez irs form In addition to her rental income of $13,500 (12 x $1,125), Marie had the following expenses. 1040ez irs form Mortgage interest $8,000 Fire insurance (1-year policy) 250 Miscellaneous repairs 400 Real estate taxes imposed and paid 500 Maintenance 200 Marie depreciates the residential rental property under MACRS GDS. 1040ez irs form This means using the straight line method over a recovery period of 27. 1040ez irs form 5 years. 1040ez irs form She uses Table 2-2d to find her depreciation percentage. 1040ez irs form Because she placed the property in service in February 2008, she continues to use that row of Table 2-2d. 1040ez irs form For year 6, the rate is 3. 1040ez irs form 636%. 1040ez irs form Marie figures her net rental income or loss for the house as follows: Total rental income received  ($1,125 × 12) $13,500 Minus: Expenses     Mortgage interest $8,000   Fire insurance 250   Miscellaneous repairs 400   Real estate taxes 500   Maintenance 200   Total expenses 9,350 Balance $4,150 Minus: Depreciation ($120,000 x 3. 1040ez irs form 636%) 4,363 Net rental (loss) for house ($213)       Marie had a net loss for the year. 1040ez irs form Because she actively participated in her passive rental real estate activity and her loss was less than $25,000, she can deduct the loss on her return. 1040ez irs form Marie also meets all of the requirements for not having to file Form 8582. 1040ez irs form She uses Schedule E, Part I, to report her rental income and expenses. 1040ez irs form She enters her income, expenses, and depreciation for the house in the column for Property A and enters her loss on line 22. 1040ez irs form Form 4562 is not required. 1040ez irs form Prev  Up  Next   Home   More Online Publications