Do you want to be more prepared than ever for the January 31st deadline for 1099 forms? Understanding tax statements and 1099s is essential for landlords and property managers who want to save on time, stress, and tax penalties. Whether you're a seasoned property owner or managing rentals for the first time, knowing when and how to issue or receive 1099s can save you from costly mistakes.
Start preparing today! Read on to learn more about what landlords and property managers need to know about tax statements and 1099s to stay compliant.
Tax Statements and 1099s in the Property Management Context
The IRS uses 1099 forms to track non-employment payments made to taxpayers in a given tax year.
The IRS compares W2 forms, tax statements, and 1099s to each taxpayer's Form 1040 and other tax return documents. This shows the IRS whether you owe them more money or are entitled to get some money back.
1099 Forms for Property Managers and Landlords
Out of all the different types of 1099 forms, there are only three that property managers and landlords need to worry about:
- Form 1099-MISC
- Form 1099-NEC
- Form 1099-K
Form 1099-MISC is the primary document for property income reporting. A landlord who's received more than $600 of rental income in a tax year must prepare and send a 1099-MISC to the IRS.
If you've received income or disbursements through a payment processing app (e.g., Venmo or PayPal) or via a credit card, then you must record that with Form 1099-K. The IRS plans to have the threshold at $600, as with the 1099-MISC. However, for this tax year, the threshold appears to be at $5,000.
Form 1099-NEC documents payments made to independent contractors. If you've paid an independent contractor to provide a service for a value exceeding $600, you must send them a 1099-NEC form to record their non-employee compensation (NEC). Some examples of the types of contractors envisioned here include:
- Plumbers
- Electricians
- Pest control services
Some services are exempt from requiring a 1099-NEC. If you're uncertain about whether a particular vendor is exempt, you can also follow the procedures related to Form W9.
Tips for Real Estate Tax Preparation
Organized records are the key to fulfilling landlord tax obligations. It's essential to regularly track expenses and file your bank records and supporting documents in an accessible and organized way.
If you haven't yet done your tax accounting tax year, take some time out to gather and organize as many of these records as you can. You can also reduce stress by hiring a property management company to take on this task.
Get Ahead of Your Tax Obligations This Tax Year
There are excellent tax benefits for landlords who file their 1099 forms on time. However, your tax statements and 1099s must be filled out correctly, and you must also use each 1099 form for its proper purpose. Start your tax research and preparation early so you don't miss the deadline.
If you need extra help, PMI Beach Properties delivers full-service residential property management in Palm Beach County, FL., with a wealth of expertise. We can streamline your rental property tax season by helping you with your tax statements and 1099 forms. Contact us today for unbeatable accuracy and timely compliance.
