tax on rental property seems high

[rickcoup]

I am using Turbotax premier. Before entering my rental property numbers, the IRS owns me $1700.  I have a small one-bedroom apartment for renting. Monthly charge is about $1100/month. After all the HOA fee, management fee, property tax, repairs and etc. The turbotax shows that my profit is about $1300/ year. But now I own IRS $500. It like charging me $2200 tax on it. Does it make sense? TIA.

[MarilynG1]

No, it does seem excessive that adding $1300 more income would increase your tax that much.

However, since we can't see your return in this forum, you should definitely look at your Form 1040 and Schedule E and review the numbers. 

In TurboTax Desktop, go to FORMS in the upper right corner.

In TurboTax Online, you can see all your forms after you have paid for the program, or go to TAX TOOLS > TOOLS > VIEW TAX SUMMARY in the left-side menu.  Then, back at the menu, choose 'Preview My 1040'.

Are you sure you have entered all your expenses?  Most rental property generates a negative income.  Have you entered your rental as an Asset in the Assets/Depreciation section?

If you can't resolve your issue, you can Contact TurboTax Support where they can actually look at your return.

[rickcoup]

Thanks for the reply. The depreciation was added by the turbo tax automatically. I have a case number and shared some screen with the representative this morning. I was told they could only send me generic links unless I have an advantage  account.

I will go back and review the actual forms. 

[DianeW777]

If you would like to send us a “diagnostic” file that has your “numbers” but not your personal information it would help.  If you would like to do this, here are the instructions: 

TurboTax Online:

Go to the black panel on the left side of your program and select Tax Tools. 

1. Then select Tools below Tax Tools. 
2. A window will pop up which says Tools Center.  
3. On this screen, select Share my file with Agent. 
4. You will see a message explaining what the diagnostic copy is.  Click okay through this screen and then you will get a Token number. 
5. Reply to this thread with your Token number and your state. This will allow us to open a copy of your return without seeing any personal information.  

TurboTax CD/Download:

If you like, you can send a copy of your return that will be scrubbed to eliminate your personal data by using these steps:

1. Click on Online in the top left menu of TurboTax CD/Download for Windows
2. Select 'Send Tax File to Agent'
3. Write down or send an image of your token number and state then place in this issue.
4. We can then review your exact scenario for a solution.
5. Please also tell us any states included in the return. This is necessary for us to view the return.

We will then be able to see exactly what you are seeing and we can determine what exactly is going on in your return and provide you with a resolution. 

[rickcoup]

Thanks. I will give it a try if I couldn't find anything in the forms.

[rickcoup]

I opened the form Schedule C. And leaved everything not changed. But check the box of 32b. "Some investment is not at risk". The Federal Refund changed from $1752 to -$586. Any thought?

[Rick19744]

You should not check the box "some investment is not at risk".

[rickcoup]

I have to check one of the two check boxes.

• 32a All investment is at risk
• 32b some investment is not at risk

From the conversation with the agent and the links that she sent, I feel I should select 32b. If I choose 32a, the refund amount is not changed. But at the end, the audit risk is very high. Thoughts?

[rickcoup]

I am really questioning the Turbotax that why checking the box 32a results in so much tax charges. It's even more than my profits. What kind of the calculation behind it?

[PaulaM]

If your rental investment isn't at risk or partially at risk, then you losses are limited. Check to see if you have Form 6198 At-Risk Limitations in your documents.