Miami, Florida is a hot spot for residents because of the beautiful year-round weather, beaches, and overall culture and lifestyle. There is ample opportunity for real estate investors to capitalize on the attractive Miami life.
Whether you have multiple rental properties or one, accounting can get confusing. Without a background in numbers, you may fail to understand the importance of tax statements and 1099s.
Keep reading to learn how you must report your rental income and how a property manager can help.
1099s for Rental Income
Tax statements and 1099s are used to report rental income. Landlords should familiarize themselves with 1099s or hire a property manager who understands these financial documents.
To avoid unreported income, the IRS requires property owners to report income worth $5,000 or more. Previously, the income reporting guidelines threshold was $20,000.
One of the best 1099 filing tips is to report income received every month. This way, you'll be ahead of the curve when it's time to file taxes for the year.
1099-MISC vs. 1099-NEC vs. 1099-K
There are different types of 1099 forms, but the 1099-MISC, 1099-NEC, and 1099-K are the most common for property owners. You might have to file each of these landlord tax forms.
1099-MISC is used for declaring income from cash and checks. If you allow tenants to pay rent via these methods, you'll use this form to report that income.
A 1099-NEC form is necessary for non-employee payments. If you hire independent contractors and pay them more than $600 in the given tax year, this form is required.
For example, if you hire outside contractors for maintenance and repairs, you'll need this form. You'll also need it for other freelance help, such as attorneys.
Lastly, the 1099-K form reports income made through online methods. Many landlords utilize the convenience of online rent collection platforms. Digital services should provide you with the required form for reporting income.
Tax Season Preparation
In addition to tax statements and 1099s, there are other documents you should prepare for tax season. A property manager can help you collect the following financial documents:
- Rent roll or bank statements
- Expense receipts
- Previous tax returns
If you consistently log income and expenses throughout the year, doing your taxes will be much easier.
When you hire a property management team, they will take on your accounting process. With top-of-the-line technology, property managers can streamline your financial tracking, allowing you to take it easy during tax season.
Tax Statements and 1099s: The Bottom Line
Tax statements and 1099s are important for any rental property owner to understand. With the help of a professional property management team, you'll have peace of mind knowing your investment is taken care of.
Pristine Property Management LLC has detailed financial reporting tools to keep tabs on your property.
We track financials and report to you monthly through a web-based accounting system. You can stay in the loop by logging into your owner's portal and checking financials in real-time.
Our goal has always been to help Miami landlords protect their investments. Contact us today to learn how we do it.
Eddie Miller, Partner of PPM, is the Past-President of the SE Florida Chapter of the National Association of Residential Property Managers. NARPM® promotes the high standards of business ethics, professionalism and fair housing practices. The Association has a structured educational program and certifies its members in the quality standards of the residential property management industry.
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