Owning a rental property is a great way to increase your net worth. However, this additional income can be quite tricky for a taxpayer to report to the IRS.

Owners report their rental property income on Schedule E and attach it to their IRS form 1040. You will usually need to include all rent payments you receive in your gross income, however you must also report the following rental property related items as income:

• Advanced rent
• Security deposits
• Lease canceling payments
• Property or services received
• Other expenses paid by tenants