Did you know that 20 million rental units are owned and managed by individual investor landlords (according to Yahoo Finance)? These are all landlords who have to provide for their own tenant placement, record keeping, and tax accounting. If that sounds like you, make sure that you know everything you need to about tax statements and 1099s in Missouri's tax laws.
Understanding how these tax forms work will help streamline your reporting obligations during tax season. This brief guide will touch on all the essential aspects of this topic.
Differentiating Tax Statements and 1099s for Landlords
"Tax statements" refers to any documents used during the tax reporting process. These can be statements that citizens send to the IRS for filing or documents the IRS issues to citizens.
1099 forms are one type of tax statement. When a person or organization pays you a non-employee income (including fees, commissions, and rental incomes), they fill out a 1099 form declaring that payment. They then send copies of that form to you and the IRS.
Knowing Your 1099 Forms and How to Use Them
There are currently 17 different types of 1099s, and only three apply to landlords and property management. These are:
- The 1099 K form;
- The 1099 MISC form, and
- The 1099 NEC
The 1099 K form in the 2024 tax year (reporting 2025) is for all payments processed through an online service (like Venmo). If you collect rent on one of these platforms, you'll use the 1099 K form to record these payments if they amount to $5,000 or more.
The 1099 MISC form is the go-to for most landlords, as it records rental incomes exceeding $600 for the tax year. Landlords also use the MISC to report their rental business's deductible expenses.
People doing work on a freelance basis must now report their non-employee earnings with the 1099 NEC form. Property managers working for themselves fall into this category. These taxpayers often use other tax statements and 1099s to stay fully compliant with the IRS's requirements.
Tactical Tax Tips for Landlords
If you're a new landlord, the tax filing process can seem daunting. Luckily, strategic tax preparation for landlords can make the process painless and efficient.
The first tip for effective tax management is to set a date for sending 1099 forms to your tenants. Most landlords and property managers do this well in advance so that renters can fill out the forms they need before the tax season crunch. Ensure your tenants know when this will happen and are ready to complete these forms.
Our second tip is to keep air-tight accounting records. This boosts the accuracy of all the information you record on the 1099 forms and is crucial when deducting expenses from your taxes.
Finding Help With Tax Filing for Landlords
Landlords and property managers face extra paperwork during tax season, but a smart approach can make it easy. First, you need to identify which 1099 form you need your tenants or clients to send to the IRS. If you have an employment contract and are a property manager or landlord on the side, having all your tax statements and 1099s in order is vital.
At PMI KC Metro, we're uniquely qualified to help landlords and property managers who juggle multiple sources of income. For more Blue Springs landlord tax tips and unbeatable property management expertise, contact us today.
