You materially participated in the operation of this business activity during the year, if you meet ANY of the following tests:
1. You participated in the activity for more than 500 hours during the tax year.
2. You are the only person who substantially participates in the activity, including individuals who do not have an ownership in the activity.
3. You participated in the activity more than 100 hours during the year and no one else participates more than you do, including individuals who do not have an ownership in the activity.
4. The activity is a significant participation activity, and you participated for more than 100 hours in each of several activities, and the total for all these activities is in excess of 500 hours.
5. If any of the above situations applied to you in any five of the last ten years, you are deemed to have materially participated this year.
6. Based on all the facts and circumstances, you participated in the activity on a regular, continuous, and substantial basis during the tax year (you must have participated for more than 100 hours during the year).
However, your participation in managing the activity does not count in determining whether you materially participated if anyone (other than you) received compensation for managing the activity or if anyone spent more hours during the tax year than you performing services in the management of the activity.
If you are an active participant in your rental activity, then you may be entitled to additional deductions. To meet the active participant requirements, you must be at least a 10% owner and have made major management decisions regarding the property such as approving tenants and authorizing repairs.
Screens regarding your material participation and screens relating to your active participation can be found in the Rental Properties and Royalties section of TurboTax (CD/download, but it's similar for TurboTax online). As you move through the introductory screens, you will get to the Rental Summary screen. Select Property Profile and as you move through the screens in this section, you will see a screen that relates to active participation.
@jvmoney
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