Categories for filing taxes

Sue1915
Level 2
Black Mountain, NC

Categories for filing taxes

What types of expenses should be put in what categories for Federal Income tax forms.  For example, improvements such as an over head fan or addition of deck stairs or even alarm clocks or sheets etc.  I am so confused and everyone seems to say something different. Turbo tax does not give a lot of help on deciding where expenses go.  Help!   

2 Replies 2

@Sue1915 

Taxes and deductions for Rental Property can be complicated. It's usually best to contact a tax professional familiar with rental properties and the appropriate deductions. You can review the IRS publications for rental properties as well.

 

IRS Rental Income & Expenses - Pub 527

https://www.irs.gov/forms-pubs/about-publication-527

 

Lorna170
Level 10
Swannanoa, NC

@Sue1915   You may want to make an appointment with a tax professional to get a clear answer on how to complete your schedule E (or C) on Turbotax.  In the meantime, this may help.

 

Improvements are major things attached to the property that would increase resale value.  An example would be paving the driveway or replacing the roof.  These items are not recoverable expenses but are factored in under depreciation.  

 

Cleaning -- includes the cost of a housekeeper to turnover the property and outdoor maintenance work like mowing and gardens.  

Repairs -- the cost of materials, contractor fees -- this would be the cost of purchasing and installing the overhead fan and the deck stairs.  This category would also include yearly inspections of equipment (heating, plumbing, etc.) and any expenses related to fixing or replacing such equipment.

Supplies -- consumables relevant to your property -- cleaning products, toilet paper, replacement towels and linens, replacing the small appliances like a new coffeepot, propane for a gas grill, etc.

 

We keep a spreadsheet of every expense generated by our property and review each item with an eye to the category assignment for taxes.  After a while you will know where an expense should go.  The key is to remain consistent with your assignment.  Best wishes!