Tax Day 2024 has passed, but it's never too early to start preparing for next year. Tax season can be stressful if you don't get your financials in order in advance.
Businesses like rental properties have specific tax requirements they need to follow to avoid IRS audits. By understanding tax statements and 1099s, you can better prepare to report your income accurately.
Denver Metro landlords can use this guide and seek help from a property manager to find success in real estate accounting. Keep reading to learn what you need to know.
Tax Statements and 1099s: The Requirements
Tax statements and 1099s can get out of hand if you wait until the end of the year to collect financial data. Having a rental property accounting system in place will help you prepare for tax season and keep your documents in order.
The IRS requires landlords to report income from real estate transactions. The different types of 1099s can be used to report rental income based on how that income is received.
If you hire outside contractors and have maintenance expenses to take care of, 1099s are important for this too.
Types of 1099s
If you receive income online, you can report it with Form 1099-K. The payment company you use will provide this form during the year.
A property management company may implement a tenant portal. This makes online rent payments easier. They will have access to these forms and can help you organize them for tax season.
1099-MISC forms are used to report rental income made from cash or checks.
The 1099-NEC form is used to report compensation for non-employees. If you paid an independent contractor more than $600 in the tax year, this form is a must.
1099 Reporting Tips
Landlords in the Denver Metro area must report every 1099 form. The IRS will automatically match your rental business with the 1099 forms with your employer identification number (EIN).
Although all parties should give you 1099 forms, they may fail to send them to you. For example, your payment processor may send the 1099-K form to the IRS directly.
In this situation, you might not realize the taxes you owe. It's important to take control of your business finances to have a good idea of what you are forced to pay at the end of the year.
A property manager with accounting experience can prepare you for different possibilities. With an efficient system in place, you should have no questions regarding your tax liability.
Hire a Property Manager in Denver to Help
Landlord taxes can be complex, which is why it's important to get professional help.
Laureate, Ltd., is a full-service property management company helping Denver Metro area landlords like you. Since 1982, we've provided comprehensive services to maximize your return on investment.
We know how important tax statements and 1099s are to your income. Our professional property managers track your financials and report them to you each month.
Detailed financial reporting tools allow us to be as accurate as possible. The convenience of comprehensive financial reporting has never been easier. Contact us today to learn more about our services.
