Specialist · Portland, OR · Member since 2010 · 3k+ posts · 1k+ votes
Talked to my accountant today and he suggested I send 1099's. He said it is unclear what the repeal is all about. So, I went to the IRS to get forms and the lady at the counter said I am a trade or business and need to send the form. In looking at the publication on page 3: "Rental property expense payment. Generally, if you receive rental income from real estate, you are considered to be in a trade or business of renting property and therefore have the same Form 1099-MISC reporting requirements as other taxpayers in a trade or business. Report on Form 1099-MISC payments of $600 or more for rental property expenses."
It goes on from there to exclude if you are renting your home.
Also, the deadline is tomorrow for the recipient of the form to receive it.
Accountant, Enrolled Agent · Grayslake, IL · Member since 2011 · 5k+ posts · 2k+ votes
14y
This topic has been discuss many times.
Landlords are NOT required to issue 1099s unless they qualify as a Real Estate Professional.
You always have the option to issue them. You will fill out form 1096 along with the 1099s. The 1096 is the transmittal form that is used to consolidate the information along with the 1099s.
Josh Sterling, if you are a landlord only you are NOT required to issue a 1099-MISC to him. A self employed contractor is not an employee and a contract employee is an employee.
Accountant, Enrolled Agent · Grayslake, IL · Member since 2011 · 5k+ posts · 2k+ votes
14y
Jeff Sielicky,
Simply put, if you are just a landlord and nothing else you won't have to worry about issuing 1099s. The law was repealed and you have no obligation to issue them.
The IRS hires tons of temporary workers this time of year. So be careful of what you hear.
Also, the deadline if simply for them to be sent out of available. They have to be postmarked tomorrow if you had the requirement.
Real Estate Investor · Northeast TN, TN · Member since 2008 · 516 posts · 361 votes
14y
Originally posted by Jeff Sielicky:
Talked to my accountant today and he suggested I send 1099's. He said it is unclear what the repeal is all about. So, I went to the IRS to get forms and the lady at the counter said I am a trade or business and need to send the form. In looking at the publication on page 3: "Rental property expense payment. Generally, if you receive rental income from real estate, you are considered to be in a trade or business of renting property and therefore have the same Form 1099-MISC reporting requirements as other taxpayers in a trade or business. Report on Form 1099-MISC payments of $600 or more for rental property expenses."
It goes on from there to exclude if you are renting your home.
Also, the deadline is tomorrow for the recipient of the form to receive it.
I'd look into this.
Jeff, I disagree with your accountant. HR 4 (Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayment Act of 2011), which the President signed on April 14, 2011, very clearly repealed the requirement for landlords to file 1099-MISC. You can read HR 4 HERE
You might also want to check the date on your instructions for 1099-MISC. My page 3 of the updated 2012 instructions makes no mention of the "rental property expense payment." There are some of the older instructions which do, however, have the erroneous information, still in circulation.
Real Estate Investor · Northeast TN, TN · Member since 2008 · 516 posts · 361 votes
14y
Originally posted by Jeff Sielicky:
My instructions are for 2011 tax year. That is what we are dealing with. This is what was given to me yesterday by the IRS lady.
The instructions say if you receive rental income from RE you are in a trade or business and need to do this.
I understand Jeff, but those are old, outdated instructions. They would have been printed and circulated prior to the law being repealed.
This from the current instructions for 1099-MISC, and the IRS website:
As Steven Hamilton II has suggested, you can always issue the Forms 1099, even though you are not required to do so. I just don't like the extra paperwork. But that's just me :)
Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
14y
Josh,
Yes, a contractor who receives $600 or more in a single calendar year is to be issued a 1099-MISC in accordance with IRS regulations. Read the IRS regs since they have changed due to legislative changes. When you do issue a 1099-MISC, then you are obligated to report that to the IRS on a 1096.
Accountant, Enrolled Agent · Grayslake, IL · Member since 2011 · 5k+ posts · 2k+ votes
14y
This topic has been discuss many times.
Landlords are NOT required to issue 1099s unless they qualify as a Real Estate Professional.
You always have the option to issue them. You will fill out form 1096 along with the 1099s. The 1096 is the transmittal form that is used to consolidate the information along with the 1099s.
Josh Sterling, if you are a landlord only you are NOT required to issue a 1099-MISC to him. A self employed contractor is not an employee and a contract employee is an employee.
Investor · Round Rock, TX · Member since 2010 · 8k+ posts · 4k+ votes
14y
My accountant sent a 1099-MISC to my property management company and they sent this back:
I am emailing you because we received a 2011 1099 form that you paid $. All work that we do is for your property. You never have to pay money unless it is for work done to your property. Do NOT send this to IRS because it will be inaccurate and can cause issues with the IRS. Please respond to or mainly that this form has not and will not go to the IRS. This is very important. Thanks!
My accountant sent this back:
charges you a property management fee, according to their statements the fee is deducted from the statements every month and the net rent amount is sent to you. This is a fee they charge you and deduct from your rental income. We record your rental income at the gross amount and deduct their fee as an expense. We reported this fee in box 7 of the 1099-MISC as non employee compensation. If did not charge you a property management fee and can reverse/explain the charges that are on the statements, I will be happy to fix the 1099-MISC.
Please feel free to contact me with questions
So who is right? I am assuming my accountant is, but I wanted to make sure.
Real Estate Investor · Northeast TN, TN · Member since 2008 · 516 posts · 361 votes
14y
Originally posted by Bryan Hancock:
My accountant sent a 1099-MISC to my property management company...
So who is right? I am assuming my accountant is, but I wanted to make sure.
Bryan -
The property management company is correct in that you do NOT need to issue them a Form 1099 unless your rental activities are being treated as a trade or business. That should only be true if you are classified a real estate professional or a "dealer" for IRS purposes. If you are simply a landlord with Schedule E Rental Income and Expenses you do not need to file Forms 1099.
The method your accountant used (reporting gross rents and showing the management fee as an expense) is exactly right.
Did you ask your accountant why he feels that a Form 1099 should be issued? He may not be aware about HR 4 repealing the requirement of Forms 1099 for landlords. IF, like Steven Hamilton suggests, he has you issue a Form 1099 for any unincorporated non-employee then the Form 1099 is certainly in order. It is not WRONG for them to be issued by landlords, it just isn't REQUIRED.
Additionally, if your property management company is incorporated, or is an LLC that has opted to be treated as a corporation, you definitely would not need to issue a Form 1099. You do not have to issue a Form 1099 to a corporation regardless of the amount paid to it (with the exception of an attorney).
Real Estate Investor · Northeast TN, TN · Member since 2008 · 516 posts · 361 votes
14y
Originally posted by Steven Hamilton II:
Bryan,
I agree with your accountant. They are just trying to twist wording in hopes to avoid claiming income. Issue the 1099.
-Steven the Tax Guy
Why do you jump to the conclusion they are trying to avoid claiming income Steven ? Do you think all property management companies are tax cheats? Or just this one?
Landlords (who are not real estate pros or dealers) with only the rental income and expenses are not required to issue Forms 1099. I don't, however, agree with them that it will "cause problems with the IRS" if the form is issued.
Accountant, Enrolled Agent · Grayslake, IL · Member since 2011 · 5k+ posts · 2k+ votes
14y
Bill Walston,
It is nothing specific. I have no issue with property management companies. I feel that this one may be trying to avoid declaring income based upon their distinct rejection of receiving a 1099. They are just trying to make an excuse to not have one more way to reconcile income. As I said, You are never doing the wrong thing by issuing a 1099. I issue them for anyone who receives any kind of payment from me.
Bryan Hancock, You did just right in issuing the 1099. As an RE professional you are considered in an active trade or business. This means you have to issue the 1099.