I will be reporting the income on schedule E.====>>>>>>> You need to include the rental income on your taxes using Sch E of 1040 and filing your taxes using form 1040. As you rent part of your home, you must divide certain expenses between the part of the property used for rental purposes and the part of the property used for your personal purposes, as though you actually had two separate pieces of property.since you rent a portion of your own home, you are eligible to deduct part of your home owner's expenses, such as insurance, from the amount you are required to pay income taxes on. To determine this amount, you need to determine the percentage of your home you are renting out; you need to report rental income in the year you receive it, not the year for which the it is due.you need to determine the total square footage of your home that you rent out.then, repot on Sch E to document your rental income and expenses. To determine your expenses, multiply the percentage of your home that you rent out by the total expense for your home. For example, if your homeowner's insurance cost you $600 per year and you rented out 12 percent of your home, you could include $72 as a rental expense or etc.you must deduct rental int exp/real esta taxes then utilities/advertising etc and finally depre exp in order.when you dispose of the home later, you must recapture total depreciation exp as ordinary income taxed at 25%.of coure when you sell it at a loss then no neeed to recapture the depre exp as ordinary income.
How do I report the expenses that I use as itemized deductions on my personal return (interest, taxes, ect) on schedule E ?====>>>>>>Aslongas your rental income exceeds your rental expenses then you need to report the rental income on 1040 line 17.as usual you must iremize your deductions on Sch A of 1040 to deduct your home related expenses,i.e., r/e taxes, mortgage interest exp or etc on your federal /state returns. There is no change in the types of expenses deductible for the personal-use part of your property. Generally, these expenses may be deducted only if you itemize your deductions on Sch A.butYou cannot deduct any part of the cost of the first phone line even if your tenants have unlimited use of it.