Rental Property Expense

Forum|Forum|1 year ago
March 30, 2025
1 reply
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I am entering my expenses i.e. repair, management fee etc. for my rental property income. As I enter these expenses they are reducing the federal tax due however when I entered property's insurance premium and Property Tax, it actually increased the federal tax due [as shown in the federal & state taxes due boxes at the top]. Why would this be? Thank you.

MinhT1

One probable reason is that some income-based credits such as the earned income credit will decrease when you enter more rental expenses and decrease your taxable income.

The Earned Income Tax credit (EITC) is a bell shaped curve against income. The EITC rises with income until a certain level of income when it starts to decrease to reach 0 at the maximum level of income for the category.

As an example, please look at the EITC tables from page 28 of this IRS publication.

Please note that the law requires you to deduct all allowable expenses and not leave out some to increase your income-based credits.

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