How do I show a refund of advance rent on the tax return? I had treated initial deposit as income on prior return. Is the refund an expense or do I deduct from income?

[skal]

Rental property. Tenant deposit was treated as income on my prior returns. At the end of his tenancy I gave him a refund of his deposit. How do I account for this on the tax return. Is this an expense? If so, will it come under miscellaneous expense? Or should I deduct it from total rental income?

[ThomasM125 · Accepted solution]

That should be deducted from the rent income, sort of like a return and allowance.

[Mike9241]

unless you use a management company and get a 1099 for the gross rent. then the IRS will notice a mismatch and ask about it. in this case, I would take it as a misc deduction "rent refunded" 

[skal]

No management company and no 1099. After ThomasM125's answer I was going to reduce my total rental income by the amount I refunded. Did I misunderstand? Should I be making adjustment under some other misc deduction heading? If so can you please clarify where in Turbotax. Thanks!