For property owners and property managers, tax time can mean a lot of paperwork. Filing 1099s is one of the things that can creep up on you if you’re not careful. Keep reading to learn more about IRS Form 1099-MISC and the new IRS Form 1099-NEC. We’ll tell you what they are, who they’re for and when they’re due.
If you already know what 1099s are, feel free to skip down for tips to make them as quick and painless as possible.
What are 1099s?
1099s are forms used to report miscellaneous income such as rent collected or payment for contract work. They can also be used to report royalties, prizes and awards.
When are 1099s required?
According to the IRS, you need to file a Form 1099-MISC for employee you paid at least $600 over the course of the previous year for:
- Rent
- Prizes or awards
- Income payments
- Other fees
The IRS now requires Form 1099-NEC for each non-employee to whom your business paid at least $600 during the year. Previously, these expenses were included in the 1099-MISC.
Pro tip: The right property management software can extract 1099-NEC and 1099-MISC data together while letting you view extraction reports and generate forms separately.
Confused about which form to fill out for outgoing payments and other sources of income? We don’t blame you. There are also other 1099 forms that might apply to you! A tax professional can help you if you’re uncertain about which forms you need.
Get a TCC as soon as possible
Obtain a Transmitter Control Code (TCC) from the IRS if you don’t have one. The IRS requires a TCC for e-filing through the FIRE Production System. If you already have a TCC, you do not need to apply again unless you haven’t used it for two consecutive years.
Apply online by Nov. 1 of the year before information returns are due. Applications received after Nov. 1 may not be processed in time for you to meet filing deadlines. Allow 45 days for processing.
How do 1099 forms affect property managers?
Property managers will commonly use 1099 forms for vendors and property owners. Vendors include people like maintenance workers, landscapers, bookkeepers, attorneys and other professionals. Did you pay a graphic designer more than $600 to work on graphics for your website or marketing materials? If the answer is yes, you would prepare a 1099 for them.
There are also other reasons you would file a 1099, but many of them are less likely to apply to property managers. See the full list of filing requirements.
When are 1099s due?
In general, you must provide a copy of each 1099-NEC form to all recipients and the IRS by Jan. 31 each year.
Is there a faster way to generate 1099s?
Yes! If you enter the up-to-date information, the right property management software can save you effort by completing the necessary forms for you.
Cadie Burton Myers, operations director at Land Hawk Commercial Real Estate, uses Yardi Breeze to file 1099s. She told us, “The 1099 preparation saves us a great deal of time during tax season. We rely on the 1099 reports to track vendor payments and decide what information should be sent to our CPA.”
Data extraction made easy
Yardi Breeze and Yardi Breeze Premier make it especially easy to extract 1099 data for faster processing. Like all good property management software, both platforms let you extract data for all properties or one at a time.
But what happens if you started using property management software in the middle of the year? In all likelihood, you made some payments in your new software and some in another system. To obtain the amount of the payments made in your software, you can perform the 1099 data extraction and run the verification reports. Then you will need to run similar reports in your other system. Last, add up the two amounts and manually enter the total for each vendor/owner.
The good news is that all future 1099s will be easier to complete because they’ll be automatically calculated in one place!
Including & excluding payables
Prior to generating the final 1099, you may identify individual transactions (payables) that should be included or excluded from 1099 calculations.
For example, the 1099 amount for a particular vendor may seem low, and you want to see if all the payables to that vendor were included. Property management software lets you flag a vendor or owner as Receives 1099 — but what if you initially forget to flag them? If so, all the payables you should have added for them may not be included in your 1099 calculation at the end of the year. (It’s also possible that other payables are included but should have been left out.)
Breeze and Breeze Premier make correcting payables easy. Just use the Update Payables For 1099 function to include any missed transactions. You’ll be able to quickly search for payables that are excluded or included from 1099 calculations.
What are the related forms?
If you plan on hard filing your 1099s (i.e., you plan on mailing them in), you will also need to generate a Form 1096. Form 1096 is a cover form used for paper filing only. Breeze and Breeze Premier can create this cover sheet for you.
Can you e-file?
Yes. In fact, you are required to submit 1099s electronically if you have more than 250 information returns. But even if you don’t, e-filing will save you time, as well as stamps, envelopes and a trip to the post office. Breeze and Breeze Premier can generate the e-file records you need. Once you add a transmitter vendor to your database (either your property management company or a third party, like a tax preparation company), all you have to do is download your records and upload them to the IRS.
Where can you find more information?
If you’re a Breeze or Breeze Premier user, there are multiple resources available to you in our Help Center. Log in, then go to the Help Center and click Videos>Accounting>Getting Started With 1099s for a quick overview video.
Want more detailed guides? Go to Help Center>Accounting>1099 Forms for step-by-step setup and execution tips.
Of course, taxes involve more than just 1099s, which is why we want you up-to-date with the latest tax strategies in property management.