Proper reporting of Transaction Privilege Tax (TPT) on AZ condo rental

Forum|Forum|6 years ago
February 17, 2020
3 replies
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I own a rental property in AZ. My property management firm sent a 1099-MISC with the rental income in box 1 and the TPT payments from the tenant in box 3. TurboTax states that I can't report box 3 income on Schedule E and wants to use Schedule C. What is the most appropriate way to report these TPT amounts? Should I ask the property management firm to lump them into box 1 or is there a way to report box 3 income as part of schedule E? I'd like to avoid Schedule C is possible.

Best answer by KrisD15

I am assuming you simply collected the tax and sent it to the local taxing authority. The amount you collected was the same amount as what you sent in, and that is the amount in Box 3 of the 1099-MISC.

In this case, since you reported the amount received on Schedule 1, also report the payment as a subtraction.

Name the reason for the 1099-MISC as "Rental tax collected" and the negative entry as "Collected rental tax submitted".

Click Federal

Click Wages and Income

Scroll to the bottom and click Show more under “Less Common Income”

(you may need to answer Yes/No questions and/or click “All income” first)

Scroll to the bottom “Miscellaneous Income, 1099-A, 1099-C" and click Start

Scroll to the last choice “Other reportable income” and click Start

Enter “Collected rental tax submitted" as the description and the amount and Continue

Click Done on the next page

tbolducAuthor

I've figured out how to move the Box 3 income to schedule 1, but I'm still unclear as to whether this is appropriate for reporting payments made by the tenant to cover my liability for the rental tax imposed by Arizona. I was hoping/expecting to treat this TPT as a rental expense on schedule E.

KrisD15Answer

In this case, since you reported the amount received on Schedule 1, also report the payment as a subtraction.

Name the reason for the 1099-MISC as "Rental tax collected" and the negative entry as "Collected rental tax submitted".

Click Federal

Click Wages and Income

Scroll to the bottom and click Show more under “Less Common Income”

(you may need to answer Yes/No questions and/or click “All income” first)

Scroll to the bottom “Miscellaneous Income, 1099-A, 1099-C" and click Start

Scroll to the last choice “Other reportable income” and click Start

Enter “Collected rental tax submitted" as the description and the amount and Continue

Click Done on the next page

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Unrinconrentalsllc

I’m not sure if I completely understand the answer. I also own a rental property (single family home) I pay tpt taxes myself I don’t pass them onto the tentant. I never received a 1099, where would this information need to be added, if at all…

RobertB4444

The reason that the answer is the way it is is because @KrisD15 is assuming that you are taking the tax payments that you receive from the tenant and sending them to the government. If you're putting that money in your pocket and keeping it then you have extra income that is not for renting property and that is why you have to create a schedule C.

If you are sending the tax payments to the government instead of keeping them then you enter them onto the tax return as @KrisD15 showed you so that the IRS sees that you are collecting the money but not keeping it. You can also - if you're sending it forward - enter the expenses and income just like Kris showed you but onto schedule E.

@Unrinconrentalsllc

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