What makes taxes so complicated? There are two main reasons.
One is that they require careful record-keeping. The other is that one size doesn't fit all. Getting the wrong form or missing a number can throw the entire report off.
This can be a problem for property managers who have endless interactions to keep track of. There are also several new exciting real estate investment opportunities gaining traction in the current market. They include:
- Multifamily apartments
- Strategic land development
- Publicly traded REITs
- Student housing
These new income opportunities come with new ways to report it. One of the most common across all real estate investments is a 1099.
Read on for a property manager's guide to tax statements and 1099s.
What Are Tax Statements and 1099s?
A 1099 form is a tax document used to report non-traditional income over $600 that you didn't receive from an employer. This includes:
- Rent
- Pet or parking fees
- Security deposits
- Lease cancellation payments
- Payments to independent contractors
There are also several types of 1099 forms.
The 1099-NEC form is used for work done by independent contractors for services such as:
- Repairs
- Maintenance
- Cleaning
This form can also help you reap the 20% pass-through tax deduction. It's only available until 2025.
The 1099-K form isn't always required. It's only necessary for rental income reporting if you collect rent using online methods or credit cards.
The 1099-MISC form is used for any miscellaneous payments. These may include:
- Rental income
- Legal fees
- Healthcare
Landlord 1099 Requirements for Filing
Get the right 1099 forms from the IRS website. File each of them based on the current landlord 1099 requirements for filing.
Gather the personal identifying information for each landlord. This includes:
- Name
- Address
- Taxpayer identification number
Tally up the payments made to them in the last year. That includes everything you would put on the 1099 forms.
Don't forget tenant-in-kind payments. These are tasks or services tenants may perform for a reduction to or instead of rent.
Think about the landlord you're sending the 1099 form to. Are they subject to backup withholding? Was federal or state income tax withheld last year?
Once you've checked all these boxes, you can send the documents out. Tax statements and 1099s must be sent by January 31.
Best Practices
Property management tax tips can help you be a good property manager. You'll be more on top of everything going on in the property, including your tenants and your money. You'll also be more profitable.
The key to tax season preparation is organization. Start by separating your personal and business finances.
Then, start tracking all your income and expenses. Using digital tools makes this much easier.
Keep up with all the most recent law changes to maintain property tax compliance.
What If I Need a Property Manager?
Tax statements and 1099s become easier once you understand which forms you need, how to file them, and the best practices to do so.
Coastal Realty Services is one of the largest long-term property management companies in the Emerald Coast area of Florida. It's a family business that's been around for over 40 years. Contact us today to see how we can help you manage a property or find one to buy.
