How does Buildium calculate 1099 totals?

Box 1 - Rent incomeShowHide

This box is used for rental owners. Buildium totals all of the rent transactions recorded to the rental owner's properties during the tax year. For this calculation, rent is the default account for rent income and any sub-accounts. Only cash basis transactions, such as payments, are included. This calculation excludes management income accounts from the total.

Unlike most Buildium reports, our 1099-MISC calculations include transactions associated with inactive properties, rental owners, and vendors.

Why do we look at rent income instead of the owner draw or net income? There are other tax forms, like the Schedule C, that will allow the rental owner to deduct expenses, thereby reducing their final tax bill. In order to insure that this final, taxable, adjusted income amount is correct, we have to start with an unadjusted top line number.

Need a line by line detail of the data behind this calculation? Run an income statement detail report on a cash basis for all properties owned by the rental owner. Reactivate any inactive properties that may have earned income in your tax year before running the report. Box 1's total is the sum of all rent and subaccounts of rent, as described above.

Box 3 - Other incomeShowHide

This box is used for rental owners and includes all of the income transactions recorded to the rental owner's properties during the tax year that were not included in Box 1. Only cash basis transactions, such as payments, are included. This calculation excludes management income accounts from the total.

Unlike most Buildium reports, our 1099-MISC calculations include transactions associated with inactive properties, rental owners, and vendors.

Why do we look at the gross income total? There are other tax forms, like the Schedule C, that will allow the rental owner to deduct expenses, thereby reducing their final tax bill. In order to insure that this final, taxable, adjusted income amount is correct, we have to start with an unadjusted top line number.

Need a line by line detail of the data behind this calculation? Run an income statement detail report on a cash basis for all properties owned by the rental owner. Reactivate any inactive properties that may have earned income in your tax year before running the report. Box 3's total is the sum of all income that isn't rent, as described above.

Box 7 - Nonemployee compensationShowHide

This box is used for vendors. Buildium totals all of the checks that were sent to the vendor during the tax year.

Unlike most Buildium reports, our 1099-MISC calculation includes transactions associated with inactive properties, rental owners, and vendors.

Why do we look at the total paid to the vendor? There are other tax forms, like the Schedule C, that will allow the vendor to deduct expenses, thereby reducing their final tax bill. In order to insure that this final, taxable, adjusted income amount is correct, we have to start with an unadjusted top line number.

Need a line by line detail of the data behind this calculation? Go to the Financials tab of your vendor. Add up all of the checks that have transaction dates that fall within your tax year.

 

Need more information? No problem. We completely understand. We provide general guidance and are not tax advisors. Please consult a tax accountant if you have specific questions.

Advice on places to research on your ownShowHide

Review the IRS website here: http://www.irs.gov/instructions/i 1099msc/ar02.html.

The most relevant section to review is Payments of rent to real estate agents [are not required to be reported on Form 1099-MISC), but see Regulations section 1.6041-1(e)(5), Example 5.

An example of this can be found online at http://www.taxalmanac.org/index.php/Reg._1.6041-1. Example 5.

G is a rental agent who manages certain rental property on behalf of property owner H. G finds tenants, arranges leases, collects rent, responds to tenant inquiries regarding maintenance, and hires and makes payments to repairmen. G subtracts her commission and any maintenance payments from rental payments and remits the remainder to H. With respect to payments to repairmen, G is performing management or oversight functions and is subject to the information reporting requirements of section 6041. With respect to the payment of rent to H, G is subject to the information reporting requirements of section 6041 regardless of whether she performs management or oversight functions or has a significant economic interest in the payment. See §1.6041–3(d) for rules relating to rental agents. See §1.6041–1(f) to determine the amount that G should report to H as rent. (f) Amount to be reported when fees, expenses or commissions are deducted—(1) In general. The amount to be reported as paid to a payee is the amount includible in the gross income of the payee (which in many cases will be the gross amount of the payment or payments before fees, commissions, expenses, or other amounts owed by the payee to another person have been deducted), whether the payment is made jointly or separately to the payee and another person. The Commissioner may, by guidance published in the Internal Revenue Bulletin, illustrate the circumstances under which the gross amount or less than the gross amount may be reported.

Article #: 111351

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