From 2024, third-party payment providers must declare any income paid to their clients if it exceeds $5,000. This threshold will decrease as the IRS implements its new taxation policies for these payments.
As a property manager, you're likely to act as an intermediary between tenants and landlords by administering payments via an online portal or electronic funds transfers.
That means you're responsible for providing your landlords with the correct tax statements and 1099s so they can meet their tax obligations.
Read on for our top tax compliance tips to help you navigate your year-end tax prep.
About Tax Statements and 1099s
Property tax statements derive from share some similarities with owner statements in that they reflect rental income and expenses, as well as the net operating income of a landlord's properties.
In line with responsible accounting practices, the information provided on the tax statement must match the data reflected on the landlord's bank statements and 1099 forms.
Two types of 1099 forms apply to landlords:
- Form 1099-MISC for payments via check or cash
- Form 1099-K for electronic transfers and debit or credit card payments
A third form, the 1099-NEC form, should be completed for any payments made to vendors and contractors on behalf of your landlord. These contractors must receive a 1099-NEC from you if you've paid them more than the annual income threshold.
Tax compliance for property managers doesn't involve much more than that regarding your responsibility to your landlords. Accurate record-keeping will simplify this procedure and streamline 1099 filing for your landlords.
Filling out 1099s Accurately
You can reduce landlord stress by providing them with the necessary paperwork in good time for them to meet their tax deadlines.
There are several mandatory sections on each 1099 form, so be sure to have this information to hand when filling out the form. You'll need:
- The taxpayer's identification number
- An address for the 1099 recipient
- Total amount paid to them during the tax year
You can download the correct 1099 forms and find more information about these forms on the IRS website.
Your landlords will use this information to complete a Schedule E form with details of their profits, income, and expenses for the year.
Detailed owner statements and property financials can help them save on taxable expenses, like:
- Property management fees
- Property taxes
- Landlord insurance
- Utilities
- Repairs and maintenance
Your landlord's tax professional may contact you for more information, so you must keep accurate records of every transaction performed during your duties as a property manager. Your attention to detail can help your landlords avoid paying more taxes than they need to.
Talk to Tacoma's Property Management Experts
Tax statements and 1099s are an integral part of income reporting for Tacoma landlords, helping them meet their tax compliance obligations more easily and effectively.
PMI South Sound is a leader in property management in Tacoma, thanks to our experienced team of professionals specializing in local real estate. Our offering includes brokerage services and personalized property management services using the latest technology.
Explore our recipe for enhancing profits while reducing landlord stress and risk.
