$*******$

Scenario $3$: Rental Property with a Twist

Emily owns a rental property generating $$18,000$ in annual rental income.

Expenses related to the property:

Mortgage interest: $$8,000$

Property taxes: $$3,500$

Insurance: $$1,200$

Repairs and maintenance: $$2,000$

Depreciation: $$5,000$

Emily also occasionally rents out a room in her primary residence for short$-$term stays, generating $$4,000$ in income.

Other wages: $$50,000$

Interest and Dividend Income: $$600$

Itemized Deductions: $$20,000($includes some of the above expenses$)$

Allowable deduction for self$-$employment tax: None $($but potentially on a portion of the income$)$

Calculate:

Taxable income from the primary rental property.

How the short$-$term rental income is taxed $($if at all$).$

AGI, Taxable Income, and Total Tax Liability.