Form 1099 is a US tax form that reports non-employee income and compensation to the IRS. Starting in 2021, there are two types of Form 1099 property managers may have to file: Form 1099-MISC and the new Form 1099-NEC.
In this article, we’ll provide detailed answers to some frequently asked questions about Form 1099s. To learn how to use Buildium’s 1099 e-Filing solution, see this article.
- What is the 1099-MISC?
- What is the 1099-NEC?
- What is a 1096 form?
What is the 1099-MISC?
A rental property manager must file a Form 1099-MISC whenever they, acting as a rental property owner’s agent, receive rental payments during the year totaling $600 or more. The gross amount of rent received must be reported—that is, don’t deduct the amount of your commissions or other fees or expenses.
Property management companies should report income earned on the owner's rental property into box 1 for rent income and box 3 for all other income (ex: repair reimbursements, parking income, etc.). Please note that income paid to vendors was previously reported in box 7 of the 1099-MISC and will now be reported in box 1 of the 1099-NEC form. Learn more
What is the 1099-NEC?
The 1099-NEC is now the form you use to report payments you made to vendors, contractors, and other non-employees. Any vendor that has received more than $600 during the tax year needs to receive a 1099-NEC. That would include:
- Maintenance providers such as landscapers, plumbers, and HVAC professionals
- Service providers such as locksmiths, laundry and dry cleaning, or fitness instructors
- COVID-related services such as deep-cleaning and sanitizing services
What is the 2021 deadline to file 1099s?
All 1099 forms must be filed with the IRS by February 1, 2021. This is whether they are filed electronically or on paper. The functionality to have Buildium file with the IRS is still available after this deadline, however we cannot guarantee that it will meet the IRS deadlines if filed after this date.
What is a payer?
A payer is the entity — property management company or HOA — that files a 1099 form. Learn more
What is a recipient?
A recipient is the rental owner or vendor to whom you will send a 1099 form. Learn more
Do I have to file a 1099 to an LLC?
Generally, yes; unless the LLC is classified as a corporation for federal tax purposes by filing Form 8832. When in doubt, file a 1099 to the LLC.
Do I need to file for companies such as Home Depot?
No. C corporations, S Corporations and LLCs taxed as a C Corporation or S Corporation do not require a 1099. Furthermore, 1099s do not need to be filed for the purchase of goods.
Do I need to file for utilities paid?
No. Utilities paid are not reportable income. In addition, the utility company would classify as a corporation as listed above.
Do I need to file for security deposits?
No. Security deposits are liabilities. 1099s are to report income.
Do I need to file a 1099 for Buildium?
You do not need to file a 1099 for being a Buildium customer. If absolutely necessary, please see here to access Buildium’s W-9 for your records.
What about reimbursements?
A reimbursement is a repayment of an expense and is for W-2 employees only. Learn more about managing reimbursements.
If I use the same vendor for multiple associations, do they get a 1099 from each association?
Yes, the vendor would get a separate 1099-NEC from each association if they earned more than $600 from it.
What is a 1096 form?
The 1096 form is a cover sheet that tells the IRS how many paper forms are included in the box when you mail in your batch of 1099 forms. If you e-File through Buildium, the 1096 form is not required since our solution will do the count automatically.
Where can I find information about tax forms and procedures by state?
Each state has its own tax forms and procedures. Contact your state tax department to learn about your state’s requirements and get the necessary forms. See here to find your state’s tax agency.
What are some examples of special state tax rules for landlords?
Some states also have special tax rules that apply only to rental property owners. For example:
- California requires residential rental property owners who live out-of-state to withhold 7% of their rental payments over $1,500 (however, this requirement does not apply to corporations, LLCs or limited partnerships qualified to do business in California). For details, see the California Franchise Tax Board Nonresident Withholding page.
- Minnesota requires, by January 31, that all rental property owners, managers, or operators provide a Certificate of Rent Paid to each person who rented from them during the year. Renters use this certificate to obtain a state tax refund.
- Hawaii requires all landlords to pay a 4% general excise tax on their gross receipts (4.5% for rent to a person for less than 180 consecutive days. For details, see An Introduction to the Transient Accommodations Tax.