Schedule E vs. C

[Rick19744]

If you need assistance, you will need to provide an actual question.

[mesquitebean]

And what product are you using?   By your username above it says "Free Edition", which cannot prepare Schedule E or C.    Or are you using desktop software (CD/download) installed on your computer?

[jquiring]

I am using TurboTax Deluxe 2017 and it is calculating my E rental income at that same rate as my C income. Is that right?

[Carl]

Schedule E is used for reporting rental income from residential rental real estate, and royalty income. That's it.
SCH C is used for reporting active business income, and that's it. Rental income from residential rental real estate is not reported on SCH C. If rental real estate is the only business income you have, then you have no need to be filling out a SCH C at all.

[Carl]

Schedule E is used to report "passive" income. This income is either rental income you receive because you own rental property, or a royalty payment you receive. Passive income is not subject to the additional self-employment tax, and that's why it's reported on SCH E. Passive income is income that you receive, but don't actually work for and "earn".

SCH C is used to report self-employment business income. This is income that you go out and actually "do" something to earn it. This income is reported on SCH C and in addition to the regular income tax, is also subject to the additional self-employment tax, if that SCH C income is more than $399 for the tax year. The Self-Employment tax is basically the employer's side of your social security and Medicare. It gets credited to the Social Security account of the business owner listed on the SCH C, and nobody else.

[mikewax]

If i am a LLC, only owner and have a store selling used product, i use Schedule C, correct?

thanks

MDW

[VolvoGirl]

Yes if you are a Single Member LLC.   But if your LLC is an S corp you need to file a separate 1120 S Business return.

[tdo061803]

I rent out rooms in my home on Airbnb and don't provide service. The home is co-owned with my girlfriend and we run the Airbnb through LLC. Do we have to report through schedule C because of LLC?

[BillM223]

Probably not.

"...a domestic LLC with at least two members is classified as a partnership for federal income tax purposes unless it files Form 8832 and affirmatively elects to be treated as a corporation." See this IRS webpage.

So you need to file a partnership return (unless you elected to be taxed as a SubS corporation). Then the LLC would issue K-1s to each of you to add to your returns.

The exception is if 

• you and your girlfriend are considered married in your state, and
• you live in a community property state

In this case, you would each file a Schedule C on your 1040s, splitting the income and expenses in proportion to your involvement with the Airbnb.

[HandWipes]

The cryptocurrency space is pretty new and not much is out for all facets of the topic. I'm running cryptocurrency nodes which validate transactions, not cryptocurrency miners, and are rewarded with cryptocurrency for providing the validation capacity. How are the gained rewarded cryptocurrency treated? Regular business income or  could it be treated as passive income since I'm literally running some fancy coded program on a virtual private server? Literally less than an hour a week in my time to ensure everything is running correct. I have to run all profits and expenses through a business entity, like a one owner LLC I have, to capture expenses to offset profits due to the 2017 tax reform. Would this be considered as active business income or a passive business income? Basically am I going to be using a Schedule C or Schedule E? 

[pjackson8]

I have a client that previous years had rental reported on schedule E and in 2022 set up a LLC specifically for the rentals for legal reasons, no change in service so I believe the properties should still be reported on the schedule E however the client is also a realtor that had 1099 NEC income and does a schedule C for this business, should the rentals be conjoined with the schedule C or keep on the schedule E?

[JohnW152]

Since these constitute separate for-profit activities -- basically, rentals vs. services -- the rentals should remain reported on Schedule E, his realtor 1099-NEC services to be reported on Schedule C.