Final answer:
Taxpayers who rent out a home must report rental income and expenses on Schedule E, which affects their taxable income and ultimate tax liability. Schedule E is attached to the individual's tax return.
Step-by-step explanation:
Yes, taxpayers renting out a home would generally report their rental income and expenses on Schedule E. Schedule E is used to report income and losses from rental real estate, royalties, partnerships, S corporations, estates, trusts, and residual interests in Real Estate Mortgage Investment Conduits (REMICs).
Rental income is reported on Schedule E, which is then attached to the taxpayer's Form 1040 or 1040-SR. Taxpayers must report all rental income received during the year, as well as all associated expenses, including mortgage interest, property tax, operating expenses, depreciation, and repairs.
Properly reporting these figures can affect the taxpayer's taxable income and resulting tax liability. It is important to accurately complete Schedule E and any other relevant tax forms to ensure compliance with the IRS and to avoid any potential fines or penalties related to improper reporting of rental income and expenses.