Are you a property owner or manager seeking advice on handling tax forms for the 2024/2025 reporting year? If yes, you're in the right place at the right time!
Keeping your knowledge of tax statements and 1099s updated is crucial to staying compliant with State and Federal tax laws. You can streamline your tax reporting with suitable approaches and make the process painless and efficient. In this brief guide, we'll cover all the essential topics for this tax year.
How 1099 Forms Work
1099 forms are a particular sub-type of tax statement used to report a taxpayer's non-employee income. When a business or person pays that taxpayer, which in our setting takes the form of rental payments or property management fees, they must record those payments in a 1099 form.
The payer sends the 1099 form to the IRS, with the whole year's payments recorded therein. They should also send a copy to the party to which they paid.
1099 Forms for Property Management
There are 17 different types of 1099s; there are only three 1099s for property owners to worry about. These are the 1099-K, -NEC, and -MISC forms.
The 1099-MISC form is the most common form used to record rental incomes. If you've received more than $600 in the tax year from your tenants, they should send a 1099-MISC to the IRS with that information.
However, some landlords may collect rent on a payment processing platform (like Venmo) or allow tenants to pay with credit cards. If you received more than $5,000 in one of these ways, the tenants should record those payments in a 1099-K form.
Finally, the 1099-NEC form records commissions and fees for contract or self-employed work. If a property owner directly pays a self-employed property manager, those fees should be reported in a 1099-NEC form.
Tax Preparation Tips for Property Owners and Managers
Dealing with new tax procedures can be daunting for new landlords, but there are ways to smooth the process. Tax preparation starts with well-organized and complete records.
You must organize your paperwork, receipts, and statements before handling tax forms. Detailed records will prevent mistakes in recording amounts and calculating your deductible expenses.
For bulletproof property tax compliance, some property managers and landlords provide their clients and tenants with the 1099 forms they need. If you've received payments above the threshold amounts, send the payees a detailed record of those payments and the 1099 forms well before the tax deadline.
Tax Statements and 1099s Made Simple
Navigating tax statements and 1099s doesn't have to be difficult for property owners and managers. Knowing how the paperwork operates and where to find the correct information is 99% of the work.
To make tax time easy for you and your tenants or clients, identify the 1099 forms your clients need to send you and the IRS. Ensure you also send a detailed record of the information those 1099s need. If you need extra help, find a tax consultant or accountant specializing in the rental business to help you.
Kenna Real Estate Foothills is the Denver property management company that can do everything for you. Contact us today for unbeatable rental income and property tax expertise.
