Open your bank statements for January and February of last year and check that every rent deposit and every vendor payment already has a category on it. That is the whole job, done twelve months late. If those two months look clean, the other ten probably do too and this checklist will take an afternoon. If they do not, you now know what you are actually doing this week, and it is not filing.
Tax season for a small landlord is mostly a records problem wearing a tax costume. The forms are not hard. Reconstructing a year of undocumented spending is.
Step 1: Close the books before the forms come out
Pull the full year of transactions for every account the rental touches. Match rent received against what the lease said was owed, month by month, and write down any difference. Partial payments, a month collected late in January of the following year, a deposit that was never actually rent: these are the three that move numbers around.
Deposits are the one people get wrong. A security deposit you intend to return is not income when you receive it. It becomes income in the year you keep part of it, and the repair you spent it on becomes an expense in that same year. If you applied a deposit to unpaid rent, that amount is rent.
Then reconcile the spending side. Every dollar out needs three things: a date, a vendor, and a category. A photo of a receipt with no category attached is not a record, it is homework.
Step 2: Decide who gets a 1099 and file on time
Schedule E asks this on the form itself. Line A asks whether you made payments that would require you to file Forms 1099, and line B asks whether you did file them. Both are yes or no boxes, right at the top, before you enter a single number.
The reporting threshold moved. For tax years beginning after 2025 the minimum threshold for these information returns rose to $2,000, up from the long-standing $600, and it may be adjusted for inflation beginning in calendar year 2027. Payments made in earlier years still follow the older threshold, so which number applies depends on the year you are filing for.
Dates matter more than the threshold does, because they come first. Form 1099-NEC is due on or before January 31 under section 6071(c), whether you file on paper or electronically. Form 1099-MISC is due February 28 on paper, or March 31 if you file electronically.
Whether a landlord has to send a 1099 at all is its own question, and the answer turns on whether your rental rises to a trade or business. Settle that in December, not on January 30.
Step 3: Sort the year onto Schedule E lines
Schedule E does not want a spreadsheet of expenses. It wants your year sorted into fifteen named buckets, per property, and it is easier to sort as you go than to sort backward in March. The expense lines are advertising, auto and travel, cleaning and maintenance, commissions, insurance, legal and other professional fees, management fees, mortgage interest paid to banks, other interest, repairs, supplies, taxes, utilities, depreciation, and a catch-all “other” you have to list.
Two of those cause most of the confusion.
Cleaning and maintenance versus repairs. They are separate lines. Recurring upkeep goes to cleaning and maintenance; fixing something that broke goes to repairs. Nothing turns on which one you pick as long as you are consistent, because both are deductible this year. What does turn on the answer is whether the work was a repair at all, or an improvement that has to be capitalized instead. The repair-or-improvement test is the distinction worth getting right.
Taxes. This is property tax on the rental, not your income tax.
Report each property separately. If you have more than three rental or royalty properties you attach as many Schedules E as you need, but the summary lines 23a through 26 get filled in on only one of them, carrying the combined totals. Line 2 wants fair rental days and personal use days for each property, so if anyone used the unit personally, count the days now.
Step 4: Check the depreciation schedule
Depreciation is the largest deduction most small landlords take and the one they are least able to explain. Residential rental property is recovered over 27.5 years under the General Depreciation System, using the mid-month convention, which treats the building as placed in service at the midpoint of whatever month it actually was.
Three things to verify before you file.
- Land is not in the basis. You cannot depreciate land. The purchase price has to be split between land and building, and that split has to be defensible.
- The short-life property is on its own schedule. Appliances, carpets, and furniture used in a rental are 5-year property, not 27.5-year property. A refrigerator you bought in year three does not belong on the building’s line.
- Improvements started their own clock. A new roof is depreciated over the same recovery period as the property it was added to, but it starts when the roof went in, not when you bought the house.
If you have owned the property for years and nobody has ever shown you the depreciation schedule, ask for it. Missed depreciation is not a free pass; the tax cost usually shows up later, when you sell. How depreciation actually works walks the whole calculation.
Step 5: Hand off a package your preparer can use
A preparer charges by how long your year takes to understand. Give them, per property: the address, fair rental days and personal use days, gross rent received, expenses already sorted into the Schedule E lines above, the depreciation schedule, closing statements for anything bought or sold, and copies of any 1099s you issued.
Add one page of notes for the things a number cannot say. The unit that sat empty for two months. The tenant who left owing rent. The $9,000 sewer line. Preparers ask about exactly these, and answering in advance is cheaper than answering by email in April.
If your rental lost money, expect a question about whether you can use the loss. Rental real estate is generally passive, but a landlord who actively participates may deduct up to $25,000 of loss against other income. That allowance shrinks once modified adjusted gross income passes $100,000 and is gone at $150,000, so the answer depends on your whole return, not just the rental.
What this looks like when it is working
The version of this checklist that takes an afternoon is the one where categorization happened during the year. Rent came in against an invoice. Every vendor payment landed on a unit with a category and an itemized invoice attached. Nothing had to be remembered. Accounting in LeaseRooster is built around that habit, and the reports will hand you the year by property when February comes.
This is general information, not legal or tax advice. Rules change and local ordinances vary. Confirm current requirements with your city, county, or an attorney before you act, and talk to a CPA about your own return.