Either my step father should put the deed to the property in my name which will simplify everything.
It simplifies nothing. It is an absolute and provable fact that "YOU" did not own the property in 2019. Therefore you can't report anything concerning this property on SCH E on "your" tax return. Period.
My step father should report the property as he normally does, claim the income, claim the expenses which would include the remodel expenses PLUS my "salary" as a rental agent which would be equal to the income from the property, and he would also take the depreciation on the property.
There's really no "should" about it. Your step-dad as owner of the property doesn't have any other "legal" choice.
You said that would be entered under the Self Employment Sch C area since it was a "buisness" income. Wouldn't I from that perspective just be an employee of my step father's rental business so he would need to provide me a W2 or 1099 for contracted work, something like that, and I would enter it in the same area with all my other normal income?
When you take your car to the repair shop to have it fixed, do you issue the repairman a W-2 or 1099-MISC? Of course not. This is no different.
They recommended against going the full route of getting a 1099 as an independent contractor for my step dad saying it would end up costing me more due to having to pay both sides of the social security, etc.
So you have a CPA who is recommending you commit tax fraud (which is a federal crime)? And you're actually considering that? For starters, there is no requirement for the owner of the property to issue 1099-MISC to anyone. But as a property manager that is required to report income/expenses on SCH C there is a requirement for you to issue a 1099-MSIC ***ONLY*** ***IF*** you paid your step dad more than $600 in 2019.
Based on what you're saying, *YOU* didn't pay your step-dad jack squat in 2019. You kept 100% of the rental income for "YOU" as your management fee. So there would be no requirement for you to issue a 1099-MISC. Your step-dad will claim that rental income as "his" income, and then in the expenses section turn right around and report it as a rental management expense that he paid to you as his property manager.
Then you report the income on SCH C of your tax return, and on the SCH C you'll basically indicate that you are in the property management business.
The absolute worst thing that can occur tax-wsie is for your step-dad to to a quit-claim deed and deed the property to you. If he does that, then it's considered a gift. Your step-dad is required to file IRS Form 709-Gift Tax Return with the IRS when/if he does that.
On top of that, it hurts you big-time in the long run. When your step-dad gifts you the property, he also gifts you his orriginal cost basis *and* all the prior depreciation already taken. So if/when you sell the property in the future, the tax liability you will incur will be a real killer.
You "REALLY" need to get rid of your current CPA. They are no trying to help you. They are only interested in what's in your wallet "right now".
