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I have an out of state investment property that's under my name that I rent out to a tenant. I did my personal income taxes through Turbo Tax for free and during the process, it asked about any investment properties. Every time I tried including it, Turbo Tax tried to charge some fee to file the what's presumably the Schedule E form.

I decided to skip it since the fee was kind of outlandish and went ahead and filed my personal income taxes and got the amount I'll be receiving on the federal and state level. I'm not sure if this was the right thing to do and now I'm a little concerned :(. So my questions are as follows:

  1. Am I screwed?
  2. Do I need to hire an accountant that specializes in real estate in the same state that I'm renting out my property in or can I just do it in the state I currently reside at?

Thanks in advance for all the feedback :)

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Am I screwed?

You could be if you get audited before you have a chance to correct this. Especially if there's a lot of income involved (>$5K). You may also be missing out on deductions and potential current/future tax savings.

Do I need to hire an accountant that specializes in real estate in the same state that I'm renting out my property in or can I just do it in the state I currently reside at?

No, you can purchase TurboTax which is not free and just fill the information asked in the interview. If you think these $40 are outlandish wait till you hear what the accountants and lawyers charge for audit defense.

Since you've already filed, you'll need to amend your return and file 1040X with the missing schedule E. You will probably also need to file a non-resident tax return in the State where the property is at, not just your home State.

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  • I'm at a loss this year. The property was newly rented out in December 2021 and had to spend money on repairs so I haven't gained anything, only lost. According to Turbo Tax - I can only amend when I receive my tax refund. So I'll need to wait like 3 weeks. At the same time they say the option to amend a 2021 tax return will become available later in the tax season. I'm not sure when "later in the tax season" is but I guess I just have to wait. I definitely learned my lesson.
    – user113103
    Feb 16, 2022 at 18:16
  • @user113103 so you could have gotten a larger refund... Anyway, it's OK to wait for several months until the software is settled (they usually send updates up to the filing deadline) and do the amended return then. In the unlikely event that you get an audit notice so quickly that you hadn't done it yet - you'll need to deal with it and it would become much more expensive, but you'd still be able to amend as part of that process.
    – littleadv
    Feb 16, 2022 at 18:20
  • Got it. Thanks for your response, it put me at ease a little. I'm calling Turbo Tax now to let them know exactly what happened. Man, I'm kicking myself right now. So let's say I do amend in the coming months, would I still be able to get those deductions and in turn a larger refund?
    – user113103
    Feb 16, 2022 at 18:25
  • @user113103 yes, it will just take much longer to get because amended returns are processed at a much slower pace
    – littleadv
    Feb 16, 2022 at 18:26
  • Understood, thanks again. I wholeheartedly appreciate your responses.
    – user113103
    Feb 16, 2022 at 18:27

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