Can somebody here answer my question regarding landlords and income reporting?

[Stargazer99]

When an individual rents out property (house) to live in what are the IRS requirements as to reporting that income?
A 1099 can only be issued if the property is used for business income. Does that mean anyone renting a home, cabin, etc receives this rent money tax free? They don't report it how can IRS know they received this rental income?
If so, seems like the working stiff is being screwed because they sure have to pay taxes.

[Angry Dragon]

1. If one has a rental property they need to file Schedule C for the IRS

That is part of federal taxes

[dawg]

6. Schedule E, actually.

But yes, they must report the income with their tax return.

[Angry Dragon]

7. me dumb----thank you

[PoliticAverse]

2. You may find this IRS webpage of interest...

Publication 527 (2014), Residential Rental Property:
https://www.irs.gov/publications/p527/index.html

Especially this section:
Reporting Rental Income, Expenses, and Losses
https://www.irs.gov/publications/p527/ch03.html

Publication 527 as a single .pdf: https://www.irs.gov/pub/irs-pdf/p527.pdf

[Nye Bevan]

3. All income needs to be reported to the IRS.

If you rent something out then you will receive the income without any deduction for tax, but you have to report this income to the IRS and pay tax on the net income (rent payments minus mortgage interest, real estate tax, repairs, and any other deductions).

I think your point is that it's easier to avoid taxes by underreporting this kind of income than income like a salary which is reported to the IRS by your employer, and you would be correct. But as well as being immoral it's not worth the risk of penalties, interest, and possible prosecution.

[The Velveteen Ocelot]

4. Rental income is not tax free.

It's taxed as ordinary income, subject to deductions for repairs, upkeep, etc. Ownership of property is a matter of public record, so don't assume it's easy to hide any rental income from the IRS. In the event of an audit that discloses the income, the interest, fines and penalties could be very stiff.

[Manifestor_of_Light]

5. And if you're wondering why the rent is too damn high,

part of it is that the landlord has to pay sky-high property taxes in one of those so-called "Low-tax" states.

They are not low tax states. I live in a state with no state income tax, so they make up for that lack of revenue by making sales taxes high, property taxes high, professional license fees high, license plate and vehicle tags high, so forth and so on.

They're gonna get you one way or the other.

[Stargazer99]

8. property taxes are federally deductible, rent paid is not