I have a rental home owned in a multi-member LLC. 2024 was the first year of business. I am using Turbotax Business 2024. As I read the directions for IRS Form 1065 they state that for a rental activity no inputs should be made on page 1 of Form 1065, that they should all appear on Schedule K. Yet, I have inputs showing up on page 1, specifically lines 16a, 16c, 21, 22, 23, and 32. Please clarify this for me. Thank you.
The amounts on Page 1 of your Form 1065 are there because they are considered ordinary income and expenses of your business and aren't directly tied to your rental activities.
You should report your rental activities on Form 8825. Any expenses that aren't directly related to one of your rental properties on this form will be listed on page 1 of your Form 1065. This is fine if they are regular business expenses (like office phone, internet, etc.).
The amounts on Page 1, lines 1-22, are summed up to determine your ordinary business income (or loss) on line 23. The total on line 23 is then reported on your Schedule K, Line 1, as ordinary business income (or loss). The total from Form 8825 is reported on your Schedule K, Line 2, as net rental real estate income (or loss).
You can make sure your information is correctly entered by following the below steps:
1. Open TurboTax Business and start or continue your Partnership tax return.
2. Select Federal Taxes from the menu bar.
3. Click on Rental Real Estate and double check your amounts related to your rental activities and Income and Deductions to check your amounts related to your ordinary business operating expenses.
Here's some additional information on Form 8825.