How does rental income count towards line 7 or 37 MAGI Income 
for Covered CA subsidies and Enhanced Silver Benefits?

Rental Income shows up on your 1040  tax return Line 17 and in 2018 going forward on line 17 Schedule 1 and is counted towards MAGI income.  The about that shows up on line 17 comes from your Income & Expenses for the property which get detailed on  Schedule E Income & Loss from Real Estate.  

Line 17 Rental Income
Line 37 Adjusted Gross Income

We are not CPA’s and Covered CA doesn’t allow us to give tax advise, but to refer you to your own CPA, tax adviser or the VITA program.

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IRS Tips

Dwelling Unit. 

This may be a house, an apartment, condominium, mobile home, boat, vacation home or similar property. It’s possible to use more than one dwelling unit as a residence during the year.

Used as a Home. 

The dwelling unit is considered to be used as a residence if the taxpayer uses it for personal purposes during the tax year for more than the greater of: 14 days   or 10% of the total days rented to others at a fair rental price. Rental expenses cannot be more than the rent received.

Personal Use. 

Personal use means use by the owner, owner’s family, friends, other property owners and their families. Personal use includes anyone paying less than a fair rental price.

Divide Expenses.

Special rules generally apply to the rental of a home, apartment or other dwelling unit that is used by the taxpayer as a residence during the taxable year. Usually, rental income must be reported in full, and any expenses need to be divided between personal and business purposes. Special deduction limits apply.

How to Report.

Use Schedule E to report rental income and rental expenses on Supplemental Income and Loss. Rental income may also be subject to Net Investment Income Tax. Use Schedule A to report deductible expenses for personal use on Itemized Deductions. This includes such costs as mortgage interest, property taxes and casualty losses.

Special Rules. 

If the dwelling unit is rented out fewer than 15 days during the year, none of the rental income is reportable and none of the rental expenses are deductible. Find out more about these rules; see Publication 527, Residential Rental Property (Including Rental of Vacation Homes).

Additional IRS Resources:

IRS Topic 414 Rental Income & Expenses

Tips

IRS Rental Income Publication #527 pdf

Form 1040, Schedule E (PDF), Supplemental Income and Loss, to report income and expenses related to real estate rentals

Turbo Tax Summary

Nolo Press – Top Ten Rental Deductions?

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