The Tax Cuts and Jobs Act of 2017 locked in U.S. federal tax rates until 2025, but your tax bracket may change due to the rate of inflation.
If your tax information includes "miscellaneous income," a 1099 tax form is involved. Miscellaneous income is money earned outside of a traditional employer/employee relationship.
As a property manager, that means for every landlord who collects more than $600 in rental income, you must send a 1099 form.
In your role as property manager, it's important to know exactly what to do with tax statements and 1099s. Keep reading to learn more from this essential guide for property managers navigating tax time.
The Importance and Process of Sending 1099s to Landlords
The job of a property manager is to file Form 1099 for all contractors who are not taxed as corporations for any money in excess of $600 over the course of the year.
A landlord who collects rent payments of $600 or more should receive a 1099-MISC. The IRS requires Form 1099 so it can verify income reporting information. It does not rely only on the honesty of independent contractors.
The deadline for sending a 1099-MISC for the previous tax year is February 1. The form must reach the Internal Revenue Service by February 28 or, when filed online, March 31.
Maximizing Tax Deductions: Tips and Tricks
The landlord is engaged in a service business and is entitled to several business-related tax deductions. Almost everything that a landlord buys for the business is tax deductible as long as it's not out of the ordinary or unnecessary.
Did you buy a computer to use exclusively for business purposes? You can deduct the cost of the computer from your taxes.
Using your car for business-related driving allows you to take a tax deduction. You can do this by using the actual expense method which also allows an annual deduction for depreciation.
Conversely, you can use the standard mileage rate. If you choose this method, you keep track of the miles you drive for business.
Other deductions include office expenses, business travel and meals, long-term assets like buying additional properties, and legal services.
Streamlining Your Tax Preparation
Getting your taxes filed in an efficient and prompt manner is the goal so streamlining the process is to your advantage. Let's look at ways to do that.
1. Get the Information You Need
You'll need a Tax ID Number (TIN). For an individual, that's your Social Security Number. For business purposes, this is your Employer Identification Number.
Have the current address and amount of money collected over the tax year.
2. Use the Latest Technology
Take time to ensure that you have the best technology to work smarter and maximize productivity.
Property Management: Tax Statements and 1099s
Tax laws change often and can be confusing. Now that you know more about navigating tax season, you'll feel more confident when it comes time to send tax statements and 1099s to landlords.
To avoid hefty penalties, put your Eagan, Minnesota area rental property in our hands. We at PMI TC Metro handle all aspects of property management including making sure you get your rent and 1099 tax statements for every property.
Contact us today through our website or by calling 651-661-1934 to schedule a consultation.
