I own some rental properties and when filling my tax form, I entered the rent revenue and expenses in Schedule E and came up with a Net Income number. I then tried to claim the home office expense by using Schedule C and I was surprised Turbotax was asking me to enter the net income of the business.
Below are my two questions:
1) Will the income shown in Schedule E be added to show my total income for 2020
2) What do I enter in Schedule C as income since I had already entered the business income in Schedule E. If anybody knows how I should claim my Home Office expense, please let me know
Ok ... here is the rub ... OIH expenses can only be taken against a non passive business income reported on a Sch C but rentals are passive income reported on a Sch E so you cannot take them.
If you run the rentals as a B&B or a motel then you would report it on a Sch C and pay SE taxes on the profits and then you could deduct the OIH but only if you run at a profit.
This is a case of having your cake and eating it too ... since you don't pay SE taxes on the rentals so you don't get the deduction.
If you have a rental then you ONLY enter information in the Sch E section ... do NOT also try to enter expenses in the Sch C section. You are NOT allowed Office In Home expenses on a rental anywhere so stop trying to do so.
Are you saying I can't claim some amount of Home office expenses if I have multiple rental properties and I have a room in my house that I used for storing files and administering these properties on a part-time basis.
Ok ... here is the rub ... OIH expenses can only be taken against a non passive business income reported on a Sch C but rentals are passive income reported on a Sch E so you cannot take them.
If you run the rentals as a B&B or a motel then you would report it on a Sch C and pay SE taxes on the profits and then you could deduct the OIH but only if you run at a profit.
This is a case of having your cake and eating it too ... since you don't pay SE taxes on the rentals so you don't get the deduction.