What Is Schedule E? Definition, Who Fills One Out
Raking in some rental income this year? Don’t forget about this form when you file your tax return.
Many, or all, of the products featured on this page are from our advertising partners who compensate us when you take certain actions on our website or click to take an action on their website. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money.
What is Schedule E?
Schedule E is an IRS tax form that collects information about income and expenses related to:
Real estate you rent out to others.
Royalties you receive.
Partnerships.
S-corporations.
Trusts.
Estates.
Residual interest from real estate mortgage investment conduits (REMICs).
5.0
NerdWallet rating- Federal: $79 to $139. Free version available for Simple Form 1040 returns only.
- State: $0 to $69 per state.
- Expert help or full service filing is available with an upgrade to Live packages for a fee.
Who fills out Schedule E?
Generally, the following people may need to file a Schedule E along with their Form 1040 at tax time.
Rental property owners. If you rent out portions of a property that you own, you may need to report the income and expenses related to that rental activity on Schedule E. Take note, however, that if you provide certain services that are considered “conveniences” for your tenants or renters, such as cleaning or housekeeping service, the IRS may view the money as business income, meaning you may need to file a Schedule C instead.
People who collect royalties. If you’re collecting royalties from a one-time gig or a more casual income stream that’s not your W-2 or main job, you may need to report that income on Schedule E. For example, that could mean royalties you collect from a book you published as a side project, or from oil, gas or mineral leases you hold as an investor. If the royalties you’re collecting are part of your business as a self-employed individual, you may need to fill out a Schedule C instead. People who receive at least $10 worth of royalties during the tax year typically get a 1099-MISC statement by January from the entity that paid the royalties. The information on that document can help you to fill out Schedule E (or C).
Schedule K-1 recipients. If you’re a partner in a partnership or an S-corporation shareholder, the company’s earnings and losses typically “pass through” from the entity to you. Generally, this means the entity’s income and expenses (and the subsequent tax consequences) flow through to you and are reported on your individual tax return via Schedule E. By March 15 (or three months after the company’s fiscal year ends), you should get a Schedule K-1 from the partnership or S-corp outlining your portion of the entity’s earnings or losses. The information on that document should help you fill out a Schedule E.
Certain beneficiaries, plus some investors. If you’re a beneficiary of an estate or a trust, you should also receive a Schedule K-1 outlining your earnings and losses, which you’ll need to reference when filing Schedule E. People who invest in real estate mortgage investment conduits (REMICs) typically use this schedule to report their earned income from residual interests for each quarter of the tax year. Because REMICs are pass-through structures, the entity itself doesn’t pay taxes on earnings; that income is passed on to the investors, who are then responsible for paying taxes it.
» MORE: How to find a CPA near you
How to fill out Schedule E
Schedule E covers four different taxable situations. You only need to fill out the sections that apply to you. Before you begin, make sure to grab any supporting documents that you might need to prove your income earnings, losses and expenses.
Part I: Income or Loss from Rental Real Estate and Royalties
Documents you may need to reference:
Form 1098 mortgage interest statement.
1099-MISC (royalty income statements).
Lease agreements.
Utility bills.
Property tax statements.
This section asks for information about your rental property or taxable royalties. You’ll need to provide details about the property types, locations and how often throughout the year they were used for rentals versus for personal use. This section also asks about your total rental income or royalties received, and it allows you to tally up the sum of your earnings as well as potentially deductible expenses.
There are a lot of rules around navigating deductible expenses, but you might be able to lower your taxable rental or royalty income. See Publication 527 for a full breakdown of deductible expenses, limitations, and how they work, plus a list of other tax forms you may need to fill out.
Part II: Income or Loss From Partnerships and S Corporations
Documents you may need to reference:
Schedule K-1.
Form 8582.
Form 4562.
This section deals with reporting income and losses related to your membership in a partnership or as a shareholder in an S-Corp. You’ll need to supply information about the name of the company, whether it was a foreign partnership and provide an EIN.
When you receive your Schedule K-1 by March, the documentation should share instructions for how to report your shares on Schedule E. There is a lot of fine print surrounding how loss deductions work in general. See the instructions for Schedule E for more information.
Part III: Income or Loss From Estates and Trusts
Documents you may need to reference:
Schedule K-1.
Similar to Part II, this section deals with income earned or lost as a beneficiary of a trust or an estate. Your fiduciary should send a Schedule K-1 to you by mid-March, which outlines your total earnings and losses, as well as instructions for how to report those items on your Schedule E.
Part IV: Income or Loss From Real Estate Mortgage Investment Conduits (REMICs)
Documents you may need to reference:
Schedule Q.
Investors who have residual interests in REMICs also need to report their share of the REMIC’s taxable earnings or losses for each quarter.
Your REMIC should send you a statement each quarter called Schedule Q, also known as Form 1066, that outlines your taxable income or loss and expenses for that time period.
5.0
NerdWallet rating- Federal: $79 to $139. Free version available for Simple Form 1040 returns only.
- State: $0 to $69 per state.
- Expert help or full service filing is available with an upgrade to Live packages for a fee.
When do you file Schedule E?
Schedule E is a supplemental tax form that is submitted along with your primary tax return (Form 1040) by the mid-April tax filing deadline or by mid-October with an extension.
The Schedule K-1 documents needed to fill out Schedule E typically arrive around mid-March, which could put some pressure on filing in time.
Where to get Schedule E
If you’re wondering how to access Schedule E, most online tax software programs will help you fill one out. Just keep in mind that tax-prep companies typically offer tiered packages that increase in price as your tax return needs get more complex. Having a Schedule E on your to-do list could mean paying a little extra to get tax help.
If you file on your own, you can access Schedule E directly from the IRS website or through IRS Free Fillable Forms. If you’re filing with a tax pro, they’ll handle filling out the return, but you’ll need to ensure you’ve provided them with all the documents they need to do so correctly.
Schedule E vs. Schedule C
The main difference between Schedule E and Schedule C is that Schedule E collects information about passive income, whereas Schedule C collects information about business income.
Deciding which document to use can be far more complicated than this definition implies. It can depend on how you participate in the taxable activity, among many other factors. A trusted tax professional, such as a, or quality tax software can help you differentiate.