A Guide To Form 1099-MISC For Rental Property Owners

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The sole purpose of filing a 1099 for rental property investors is to help the Internal Revenue Service (IRS) keep track of income generated from non-employment-related activities. Form 1099-MISC, in particular, represents an attempt on behalf of the IRS to keep track of miscellaneous incomes that otherwise wouldn’t appear on a traditional W-2. It is worth noting, however, that the IRS isn’t the only one responsible for tracking non-employee-related incomes: rental property investors will need to make sure they are both sending and receiving 1099s when necessary.

The following information pertaining to Form 1099-MISC is intended to provide generalized financial information for a broad audience; it is not a substitute for personalized tax, investment, legal, or other business and professional advice. Therefore, always seek out the assistance of a tax professional who is well-versed in the real estate industry before coming to any conclusions about filing Form 1099-MISC.

What Is Form 1099-MISC?

Form 1099-MISC reports the payments received from a single person or business entity over the course of the year the service was provided. The form is used specifically by taxpayers who need to report non-employee compensation. More specifically, however, Form 1099-MISC is issued to businesses from each client who paid them $600 or more over the course of the current tax year. The whole point of Form 1099-MISC is to help the IRS identify income earned by independent contractors.


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1099 MSC

Do I Need To File A 1099 For My Rental Property?

The recipients of qualifying payments are required to report them to the IRS on Form 1099-MISC. Anyone who receives rent, royalties, prizes and awards, and substitute payments (in lieu of dividends) must report their earnings on Form 1099-MISC, with one copy going to the IRS and an additional copy going to the entity that originally made the “payment.” That way, the IRS may keep track of compensation that isn’t traditionally documented.

Meanwhile, those making payments may also need to file Form 1099-MISC. Self-managing rental property owners were once required to report the money they paid independent contractors for services on their own property as recently as 2009. At the time, the Affordable Care Act required rental owners to report 1099-MISC income paid to service providers in relation to the rental property. No more than a year later (in 2010), the Small Business Jobs Act and the Health Care Reform Bill added some clarity to the filing process. However, the reforms didn’t last long, and by 2011 it was no longer necessary for private landlords to file Form 1099-MISC to vendors for work related to their own rental property.

Other IRS Forms For Rental Income

There are a number of 1099 forms, not the least of which are intended to provide information to the IRS about certain types of income from non-employment-related sources. Below is a list of the many 1099 forms you may come across:

  • 1099-A: Acquisition or Abandonment of Secured Property

  • 1099-B: Proceeds From Broker and Barter Exchange Transactions

  • 1099-C: Cancellation of Debt

  • 1099-CAP: Changes in Corporate Control and Capital Structure

  • 1099-DIV: Dividends and Distributions

  • 1099-G: Certain Government Payments

  • 1099-H: Health Coverage Tax Credit (HCTC) Advance Payments

  • 1099-INT: Interest Income

  • 1099-K: Payment Card and Third Party Network Transactions

  • 1099-LTC: Long-Term Care and Accelerated Death Benefits

  • 1099-OID: Original Issue Discount

  • 1099-PATR: Taxable Distributions Received From Cooperatives

  • 1099-Q: Payments From Qualified Education Programs

  • 1099-R: Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.

  • 1099-SA: Distributions From an HSA, Archer MSA, or Medicare Advantage MSA

Summary

Tax season can represent a daunting obstacle for those who don’t know how to navigate it, and Form 1099-MISC is no exception for rental property owners. At the very least, there are many landlords that don’t know whether or not they should file a 1099 for rental property, but the safest way to make sure you are covered this tax season is to mind due diligence and consult a tax professional. Do not fill out Form 1099-MISC on your own unless you know exactly what you are doing. Instead, ask a certified personal accountant to prepare any 1099s you may need. Doing so will ensure you don’t end up paying someone else’s taxes and keep more money in your pockets.

Have you ever filed a 1099? If so, what steps did you take to make the process run smoothly? Please feel free to let us know in the comments below:

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Real Estate Investing Strategies
Real Estate Investing Strategies
Real Estate Investing Strategies
Real Estate Investing Strategies
Real Estate Investing Strategies
Real Estate Investing Strategies