Real Estate Agent · Cranberry Twp · Member since 2017 · 384 posts · 198 votes
I recently started my own property management company, but prior to this I was working underneath a large franchise. When I opened my doors to my new company in the last week or two I came to find a new 1099-MISC tax withholding from the beginning of the year that I had never heard of. Apparently we as property managers are required to withhold 3.07% of owner's income for out of state owners and properly file that withholding with the federal government. Am I understanding that correctly? I know for 100% fact the large franchise I just left was not doing this and I was hoping for a little direction as my CPA isn't back for another week.
Please excuse my ignorance and thank you everyone for your help!
Investor · Verona, NJ · Member since 2014 · 1k+ posts · 832 votes
7y
Elise,
I am from NJ and my properties are in PA, my PM has never charged that. 1099-MISC is for sub contractor when you pay them, as a PM you are not paying owners because we own the property, we pay you and if anything we should be sending that to the PM, but you should be professional enough to report your income, that income for you is subject to SE tax which you would have to pay. if you are going to charge your customers to cover that cost on top of your normal rate you charge, you may not get any business.
Investor · Verona, NJ · Member since 2014 · 1k+ posts · 832 votes
7y
Elise,
I actually found what you are talking about, that is a new law this year, i have not been charged this. my PM belongs to all kinds of organizations and would have known about this, but has not said anything. i am going to have to send this to her and my accountant to find out about it.
Investor · Verona, NJ · Member since 2014 · 1k+ posts · 832 votes
7y
Elise,
looking at it a couple of times, here is my take: you do not have to send it if it is held by an entity ("A lessor includes only individuals, estates and trusts.") and also if it is for services from a non employee from out of state. ("Typically, a payment is considered “non-employee compensation” if it is made to: (i) someone who is not your employee; and (ii) for services in the course of your trade or business.")
Investor · Pittsburgh, PA · Member since 2015 · 1k+ posts · 1k+ votes
7y
@Elise Bickel Tauber we ran into the same situation and found out that it does not apply just yet. Gotta love the IRS. They make things so easy dont they. If you find out otherwise please let me know