Do you rent property to others? If so, you’ll want to read the following
seven tips about rental income and expenses.
You generally must include in your gross income all amounts you receive as
rent. Rental income is any payment you receive for the use of or occupation of
property. Expenses of renting property can be deducted from your gross rental
income. You generally deduct your rental expenses in the year you pay them.
When to report income.
You generally must report rental income on your tax return in the year that
you actually receive it.
1. Advance rent.
Advance rent is any amount you receive before the period that it covers.
Include advance rent in your rental income in the year you receive it,
regardless of the period covered.
2. Security deposits.
Do not include a security deposit in your income when you receive it if you
plan to return it to your tenant at the end of the lease. But if you keep part
or all of the security deposit during any year because your tenant does not live
up to the terms of the lease, include the amount you keep in your income in that
3. Property or services in lieu of rent.
If you receive property or services, instead of money, as rent, include the
fair market value of the property or services in your rental income. If the
services are provided at an agreed upon or specified price, that price is the
fair market value unless there is evidence to the contrary.
4. Expenses paid by tenant.
If your tenant pays any of your expenses, the payments are rental income.
You must include them in your income. You can deduct the expenses if they are
deductible rental expenses.
5. Rental expenses.
Generally, the expenses of renting your property, such as maintenance,
insurance, taxes, and interest, can be deducted from your rental income.
6. Personal use of vacation home.
If you have any personal use of a vacation home or other dwelling unit that
you rent out, you must divide your expenses between rental use and personal
use. If your expenses for rental use are more than your rental income, you may
not be able to deduct all of the rental expenses.
Contributing money and property are ways that you can support a charitable cause, but in
order for your donation to be tax-deductible, certain conditions must be
met. Read on for six things you to know about deductibility of donations.
1. Tax-exempt status.
Contributions must be made to qualified charitable organizations to be deductible. Ask the
charity about its tax-exempt status, or look for it on IRS.gov in the Exempt
Organizations Select Check, an online search tool that allows users to select an
exempt organization and check certain information about its federal tax status
as well as information about tax forms an organization may file that are
available for public review. This search tool can also be used to find which
charities have had their exempt status automatically revoked.
Charitable contributions are deductible only if you itemize deductions using Form 1040,
3. Fair market value.
Cash contributions and the fair market value of most property you donate to a
qualified organization are usually deductible. Special rules apply to several
types of donated property, including cars, boats, clothing and household items.
If you receive something in return for your donation, such as merchandise,
goods, services, admission to a charity banquet or sporting event only the
amount exceeding the fair market value of the benefit received can be
4. Records to keep.
You should keep good records of any donation you make, regardless of the amount. All
cash contributions must be documented to be deductible – even donations of small
amounts. A cancelled check, bank or credit card statement, payroll deduction
record or a written statement from the charity that includes the charity’s name,
contribution date and amount usually fulfill this record-keeping requirement.
5. Large donations. All
contributions valued at $250 and above require additional documentation to be
deductible. For these, you should receive a written statement from the charity
acknowledging your donation. The statement should specify the amount of cash
donated and/or provide a description and fair market value of the property
donated. It should also say whether the charity provided any goods or services
in exchange for your donation. If you donate non-cash items valued at $500 or
more, you must also complete a Form 8283, Noncash Charitable Contributions, and
attach the form to your return. If you claim a contribution of noncash property
worth more than $5,000, you typically must obtain a property appraisal and
attach it to your return along with Form 8283.
6. Timing. If you pledge to donate to a qualified charity, keep in mind that for most
taxpayers contributions are only deductible in the tax year they are actually
made. For example, if you pledged $500 in September but paid the charity just
$200 by Dec. 31 of that same year, only $200 of the pledged amount may qualify
as tax-deductible for that tax year. End-of-year donations by check or credit
card usually qualify as tax-deductible for that tax year, even though you may
not pay the credit card bill or have your bank account debited until after Dec. 31.
Bottom line: your support of a qualified charitable organization may provide you with
a money-saving tax deduction, but conditions do apply.
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