Who gets 1099's?
- We are required to send all of our clients a 1099 if they received more than $600 of rental income.
What is considered income?
- Income is money that is collected from the tenants and applied to an income account like "rent"
- A security deposit that is not returned to a tenant after move out that gets applied to back rent.
What is not considered income?
- Money collected from the tenant that is used to pay utility bills or security deposits.
- A security deposit that is not returned to a tenant after move out that gets applied to utility bills.
Why doesn't my cashflow(or owner's) statement match my 1099?
- PREPAID RENT - This is the most likely reason that your 1099 doesn't match. If a tenant pays rent on Dec 31st 2020 for a January 2021 rent charge it will be counted towards your 2020 total income. Sorry, this isn't our rule. Blame that IRS. On your statements we show the rent being collected on Jan 1 even though we actually collected it on the 31st. We found that this makes it much easier to read owner statements and cashflow statements. It does unfortunately cause some confusion when 1099's come out.
- Security Deposits the aren't returned- Don't forget if you don't return this to a tenant the portion of the SD that is applied to an income GL will count towards your total income.
Why were my distributions last year much lower than the amount reported on my 1099.
- Remember, 1099's report total income collected not profit. You should will be able to deduct all of your expenses and depreciate the property to help offset the reported income. Your accountant can help you with this.
My name is wrong on my 1099. Is that a problem?
- The name isn't important but the EIN/SSN is. Let us know and we will make the correct for future years. As long as the EIN/SSN it won't be an issue.
My EIN or SSN is wrong. Is that a problem?
- Probably. We will most likely need to submit a 1099 correction to the IRS, PA, and you. Submit a ticket and we will take the necessary steps.
Can you stop sending me paper copies of these?
- Yes, we would appreciate that. The IRS requires you to sign an electronic consent form first. It's easy though. Go into your owner's portal and click settings. See below: