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Hi all, I need help with determining my rental situation: I rent my property as a private citizen (no sole proprietary, no LLC, no corps) and hire a property manager. The manager screens tenant and presents me but I make the final decision. The manager fix broken stuffs in the property (with my approval). My only activities are collecting rent from tenant, pay the management fee monthly and grant permission to manager to fix if things are broken.
As for payment, Tenant pay to me directly and then I pay the manager (via Zelle), the same routine happens each month. The amount I pay the manager is over $600 in total. Now I'm confused how should I determine the following
1/ Whether my rental activity is classified as "passive activity" / "active activity" / "active participation" / "materialistic participation"
2/ Do I need to issue Form 1099-NEC to the manager? I read somewhere that if I pay via Zelle, I do not need to file 1099 NEC (since the platform will do it), is that true?
3/ What if my manager is operating under a C-corp or S-corp, do I issue 1099 NEC?
4/ I tried to fill out 1099 NEC form but it only asks for Business name. I rent the house as a private citizen, so how does this apply in 1099 NEC form
Thank you very much for the help in advance.
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1/ Whether my rental activity is classified as "passive activity" / "active activity" / "active participation" / "materialistic participation" All rentals are passive and you are actively participating.
2/ Do I need to issue Form 1099-NEC to the manager? I read somewhere that if I pay via Zelle, I do not need to file 1099 NEC (since the platform will do it), is that true? This is true for 2022 however if the company is not incorporated then you need to file a 1099-nec for 2021. Have the fill in a W-9 to keep for your records.
3/ What if my manager is operating under a C-corp or S-corp, do I issue 1099 NEC? NO ... they are exempt.
4/ I tried to fill out 1099 NEC form but it only asks for Business name. I rent the house as a private citizen, so how does this apply in 1099 NEC form The business name is YOUR name and you use your SS# for the EIN.
As for payment, Tenant pay to me directly and then I pay the manager
So you are the one to issue the 1099-NEC (not 1099-MISC). The the manager was collecting the rent, withholding their cut and then forwarding the remainder to you, then it would be the manager that would be required to issue the 1099-MISC (not 1099-NEC) to you.
Yes, I've double-checked myself, and the use of NEC and MISC above is correct in the contexts presented.
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