Property Management 1099 K

[spartacus]

I received a 1099-K for 2024 from the software we use to collect rent. As a property management company, we typically issue 1099-MISCs to the property owners for their rental income, since the money we collect isn’t ours—it goes into a trust account on their behalf. Because of that, we usually exclude that income from our gross revenues.

Now that I’ve entered the 1099-K into TurboTax, it’s showing the full amount of rent collected (including what we collected on behalf of the owners) as income, which inflates our revenue. I understand I need to report the 1099-K, but how do I properly offset the amounts we disbursed to the owners—those which we’ve already reported on the 1099-MISCs we sent them?

[PatriciaV]

In general, you should report the income from Form 1099-K as it appears. Then add a business expense for the 1099-MISC amounts you reported to your clients under Miscellaneous Expenses (ex: "Collected Rent Reported to Clients").

Your other option is to report the 1099-K was incorrect and enter an adjustment for the 1099-MISCs that you sent. Note that this flags the 1099-K on Schedule 1 for further IRS review.

1. If you choose this option, check the box under Box 1a "This amount is too high..."
2. Enter the amount to be adjusted in the box that appears as a positive number.
3. Although the 1099-K summary page will show the gross amount, the net amount will flow to your Schedule C.