Seattle ranks number seven among cities in the United States for starting small businesses. Even with over 100,000 small businesses, the community still feels uneasy when tax season rolls around.
As an investor, your business is your rental property. You could fear doing your taxes wrong just like many other business owners. When you understand tax statements and 1099s, you have a higher chance of doing things right.
This guide uncovers why and when certain tax forms are required and how a property management company can help. Read on to learn what you need to know.
1099 Tax Forms: The Different Types
You can't discuss tax statements and 1099s without understanding the different types. While there are many, there are only a select few that landlords need to know about. Landlords use 1099s to report non-employment income.
The Different Types Explained
A 1099-K can report rental income made via rent collection apps and payment services. Accepting credit or debit card transactions totaling over $600 makes this form an IRS requirement.
Many of these payment services automatically provide the corresponding 1099 form.
1099-MISC forms are used to report sources of income that differ from card payments. You'll fill out this form if you allow tenants to submit rent payments via checks or cash.
1099-NEC forms are typically used to report expenses made to independent contractors. If you hire an outside vendor to complete tasks, such as property maintenance and repairs, this form is required.
Complying With IRS Requirements
Consistent property accounting will help you comply with IRS tax reporting requirements. A property manager will help you track your monthly income to ensure you are prepared for tax season.
As you comply with these requirements, you also benefit from understanding how much money your property generates. This will help you grow your property portfolio in the future.
A property manager with accounting experience will work with you to decrease your tax liability.
Digitizing Tax Statements and 1099s
Manual methods of tracking income and expenses are outdated. A property manager will utilize state-of-the-art technology to digitize tax statements and 1099s. Doing so also automates the process.
Keeping track of income using an all-in-one software program makes the lives of landlords easier. Hands-off landlords can work with property managers who will track their investments for them.
The best property management companies offer real-time views of finances. With an owner portal, landlords will always be in the loop whether they are on the property or not.
Work With Brink to Ace Income Reporting
Tax statements and 1099s are essential to reporting rental property income. Working with a property management company like Brink Property Management, Inc., makes income reporting easy.
We have 27 years of experience helping Greater Seattle landlords with income reporting. Our process begins with rent collection and maintenance. It ends with comprehensive financial reporting.
Our web-based accounting system generates owner statements and income reports. You can always log into the system to view your statements.
Contact us today to talk to a knowledgeable team member about your investment.
