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Tax & compliance: Taxes on rental income

File an accurate and timely tax return and maximize your end of year deductions to increase your portfolio profitability and ensure your long-term investing success.

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Understanding Taxes On Rental Income For Improved Profitability

When it comes to reporting taxes on rental income there are a few things that real estate investors need to know. First, you need to know how rental income is taxed, second how you need to report rental income tax, and thirdly how to reduce your rental income tax.

With this knowledge at hand and the right tools in your pocket, you'll be able to maximize your rental property profitability by increasing tax deductions and decreasing your overall income tax liability.

Episode 5: Profit through precision: Real estate accounting strategies with Christanne Wright

In this episode, we discuss real estate tax strategies with CPA, Christanne Wright. Christanne is a real estate expert CPA who has a magnitude of experience helping real estate investors minimize their tax bills each and every year.

Christanne Wright

Accountant

Christanne advises on the importance of good record keeping, saying, "If you don't keep good records, and the IRS is so dependant on record-keeping, that you run the risk of having a lot of, or even all of your expenses excluded from your tax file."

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How is rental income taxed?

You must pay rental income tax on any property for which you receive payment in return for use or occupation. Rental income is taxed as ordinary income and you pay according to your marginal tax bracket, which is between 10% and 37%.

Rental income tax forms

Schedule E form 1040 to report your income expenses.

Schedule A form for any personal expenses associated with your rental property.

Form 4562. This allows you to report depreciation from the year you began leasing your rental property.

Form 8960 for net investment income tax applies to your rental income, you need to file.

Form 1099 for suppliers and reporting online rent collection.

Income tax rates 2023

Tax rate
Single filers
Married filing jointly  or qualifying surviving spouse
Married filing separately
Head of household
10%
$0 to $11,000
$0 to $22,000
$0 to $11,000
$0 to $15,700
12%
$11,001 to $44,725
$22,001 to $89,450
$11,001 to $44,725
$15,701 to $59,850
22%
$44,726 to $95,375
$89,451 to $190,750
$44,726 to $95,375
$59,851 to $95,350
24%
$95,375 to $182,100
$190,751 to $364,200
$95,376 to $182,100
$95,351 to $182,100
32%
$182,101 to $231,250
$364,201 to $462,500
$182,101 to $231,250
$182,101 to $231,250
35%
$231,251 to $578,125
$462,501 to $693,750
$231,251 - $346,875
$231,251 to $578,100
37%
$578,126 or more
$693,751 or more
$346,875 or more
$578,101 or more
Tax rate
Single filers
10%
$0 to $11,000
12%
$11,001 to $44,725
22%
$44,726 to $95,375
24%
$95,375 to $182,100
32%
$182,101 to $231,250
35%
$231,251 to $578,125
37%
$578,126 or more
Tax rate
Married filing jointly  or qualifying surviving spouse
10%
$0 to $22,000
12%
$22,001 to $89,450
22%
$89,451 to $190,750
24%
$190,751 to $364,200
32%
$364,201 to $462,500
35%
$462,501 to $693,750
37%
$693,751 or more

2023 tax deadlines

Annual
Return Type
Deadline
Partnership Form (1065)
March 15, 2023
Extension (1065)
September 15, 2023
Individual (1040)
April 18, 2023
Extension (1040)
October 16, 2023
All tax payments
March 15, 2023
Form 1099
January 31, 2023
Quarterly
Payment period
Due date
September to December, Q4 2022
January 17, 2023
January to March
April 18, 2023
April to May
June 15, 2023
June to August
September 15, 2023
September to December
January 15, 2024

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