Schedule E is part of IRS Form 1040. It is used to report income or loss from rentals, royalties, S corps, partnerships, estates, trusts, and residential interest in REMICs (real estate mortgage investment conduits).

Schedule E is for “supplemental income and loss,” and not earned income. Earned income is income generated from business activities.

Supplemental income is considered passive income, such as collecting rent. Of course, as a landlord, you know that rental income is anything but passive. However, passive is how the IRS sees it.