Am I responsible for issuing a 1099 for the fees I paid to the Property Manager of my rental property, if they sent me a 1099-MISC with the gross rental income reported?

[Myemerald3]

During 2014 I moved out of my house and got it ready to become a rental property.  I hired a Property Management Firm, and my first tenants moved in during January 2015.  I recently received a 1099-MISC from the PM Firm which includes one amount, the gross rental income.

My first question is do I have to issue them a 1099 for the management fees I paid to them each month?  The fees were deducted by them before sending me the net amount each month.

My second question is since they (PM Firm) receive and pay on my behalf the rental tax, should I include them anywhere on my return?  I don't think so, just checking.

This is my first time dealing with rental income, any assistance is appreciated.  Thank you!

[MargaretL · Accepted solution]

You are not required to issue Form 1099-MISC to the Property Management Firm for their fees.

You can also deduct any rental expenses that you paid.  The fact that the Management Company paid the real estate tax on your behalf is still considered paid by you. The same applies to any other expenses that you paid, or that were paid by management company on your behalf - they are deductible on your tax return as your rental expenses.

When going through Turbo Tax, you will be enter to enter any rental expenses, such us mortgage interest, real estate taxes, insurance (homeowners), management fees, etc.  If there is an expense that is not listed, you'll be able to enter the description and an amount of your expense.

Please refer to the below link for more details on rental income and expenses:

https://ttlc.intuit.com/questions/1894483-where-do-i-enter-income-and-expenses-from-a-rental-propert...

[Myemerald3]

Oh good, thank you.
Regarding the City rent tax, I should then report it as income as well as expense, correct?
The first tenant broke the lease and moved out.  The place was a mess and we had to have quite a bit of work done before my 2nd tenants could move in.  Those expenses were paid by me (through the management co), then billed to the tenants who broke the lease.  Eventually the management co was able to get all but a small amount reimbursed from the tenant.  My net expense for that whole thing was under $40.  Is it necessary to report any of that?
Just remembered that I received a non refundable pet deposit from the second tenants.  Management Co did not include that as income, I believe they should have because it's mine to keep.  Correct?

[parkervasil]

It's unfortunate (and a bit unsettling) that TurboTax Deluxe says that paying a property management company "can require Form 1099-MISC".

[trapezewdc]

My 'new' tenant paid my property management company the rent(for January 2021) at end of December 2020 but I didn't get the final disbursement(after some fees) until 1~2 weeks into January 2021.  My 2020 1099-misc has the gross rent that the 'new' tenant paid to my property management company. 

1. My prop management company got the money in 2020 but I got my money in 2021

2. The money I got was less than what's in Box 1 in my 2020 1099-misc due to management fee and other fees

How should I go about this ?

[MarilynG1]

Unless your Rental Activity is reported as a 'Business' on Schedule C (rather than an 'Investment' on Schedule E, you don't need to issue a 1099-Misc to your property manager.

Enter the 1099-Misc exactly as received.

If the property manager included it on a 2020 1099-Misc, the income reported is considered 'constructively received' in 2020.

Report the property management fees, and any other expenses the property managers deducted from the Gross Rents reported on the 1099-Misc as 'Rental Expenses'.

Click this link for info on How to Enter Rental Property Income and Expenses. 

[trapezewdc]

By the way, I also paid below two items for my rental:

1. HO-6 home insurance

2. Rental tax(NOT property tax) by my city

Can they be deducted as expenses ? If so where should I enter them in TurboTax Premier ?

[MaryM428]

To enter your rental:

1. In TurboTax, search for rentals and select the Jump to link at the top of the search results.
2. Answer Yes to the question Did you have any rental or royalty income and expenses in 2020 for property you own?
3. Follow the on-screen instructions as you proceed through the rental and royalties section.
   • We'll ask you to enter general information about your rental (like description, address, and ownership percentage).
   • Eventually, you'll come to the Rental Summary screen, which is where you enter your rental income and expenses, assets and depreciation, and vehicle expenses.  You will enter your insurance and city property tax expense in this section as miscellaneous expenses.

Tip: Rent is considered income in the year you received it, not the year it applies to. This means that a rent payment for the month of January 2021 collected in December 2020 is reported on your 2020 return.

[quyduke]

In my case, the property manager is an individual, am I required to issue a 1099-NEC to my property manager?

[PattiF]

You should file form 1099-NEC to report the payments to your property manager since you are reporting payment for services.

[alvazi2]

To follow up on this: is it possible to e-file form 1099-NEC for property management fees paid to individual via TurboTax Premier?

[MarilynG1]

If you are using TurboTax Desktop, you will need TurboTax Home & Business to create and Efile a 1099-NEC. 

Here's how to upgrade once you have started your return.

If you are using TurboTax Online, you can use TurboTax Premium to prepare W-2's and 1099's. 

Here's more info on How to Create W-2's and 1099's in TurboTax. 

@alvazi2 

[VolvoGirl · Accepted solution]

@alvazi2 

How to prepare 1099Misc & W2
https://ttlc.intuit.com/community/forms/help/how-do-i-create-w-2-and-1099-forms-in-turbotax/00/25869

You can prepare W2 and 1099NEC & 1099MISC in either the Desktop Home & Business program or the Online Premium version.

For Online Premium:
Sign in to TurboTax.
Select Tax Home from the left menu (you might already be there).
Scroll down and select Your account.
Select Create W-2s and 1099s.
This will log you in to Quick Employer Forms.
Follow the instructions to create forms online for your employees or contractors.

[alvazi2]

Thanks. However, the linked article states: “If you're a business owner…”, which I am not. But I’ll check it out. 

[DaveF1006]

Yes. If you own rental property and paid real estate management fees to manage your property, you may deduct management fees using Turbo Tax Premier if you report your rental property income and expenses. You do not need to issue a 1095 NEC to the management company or individual managing your property.

@alvazi2