1099-Misc Forms for Rental Properties Reporting Questions

[syoung123]

Hello - I have two rental properties that are managed by a property management company.  Through 2023, this property management company's accounting system tracked the 2 properties in separate accounts, and every year I received two 1099s, one for each property.  I entered the two 1099s into TurboxTax section - "Wages & Income", "1099-Misc and Other Common Income", "Income from Form 1099-MISC", along with 2 other properties that are managed by two different property management companies.  Each property had its own 1099-Misc and address.  Then under the "Rental Properties and Royalties" section, I entered the expenses for each property associated with each 1099-Misc (that I entered in the "Income from Form 1099-MISC" section mentioned above).  The schedule E would display 4 properties with 4 addresses in individual columns.

In 2024, the property management company that manages the 2 properties changed their accounting system.  My two properties are now combined into one account with combined rental incomes and expenses, and the details would give me the incomes and expenses for the 2 houses.  The management company told me that for 2024, they will send me only one 1099-Misc with the combined rents for both houses.  I think I still need to list the 2 houses on Schedule E separately, because Part I, 1a of Schedule E says to list "physical address of each property".  How should I enter this one combined 1099-Misc into TurboTax?  Do I need to get the property management company to give me two 1099 Misc, one for each house, so IRS can match each 1099 Misc to each property reported on Schedule E?  Right now, the property management company doesn't seem to be willing to provide me two separate 1099s.  My questions are:

1.    Does IRS match the "Rents" in "box 1" on each 1099 Misc to the "Rents received" line for each property listed on Schedule E?  Since the rental incomes for these 2 properties will be in one combined 1099 Misc, my 1099 Misc's won't match with the properties on Schedule E individually.

2.  Would IRS raise any issues since they can't match each individual 1099 Misc to each individual property listed on Schedule E?

3.  Do I need to enclose an explanation such as "there is one combined 1099 Misc for 2 properties listed on Schedule E" with the income tax forms that I'll be filing?  If so, what should I say? 

4.  If question 1 and 2 above are ok, how do I enter this one combined 1099 Misc for the two properties to TurboTax?

Thank you for your help in advance.

[pk]

@syoung123 , the perfect solution of course is to have  one each 1099--MIsc for each prop.  However with some amount  of  extra effort you can make it work even with ONE 1099.  I just tried out on my copy of  Windows  Home & Business and YES it does work ( with a few extra steps and careful  look-see ),

I would highly recommend  that you get the management company to issue  one 1099 for each property -- they are  getting paid for the service ( to make it easy for you and not to  make easy for themselves ).

 For IRS AUR program, even it gets flagged,  human intervention thereafter  should  stop the issuance of CP2000  ( under reported income ).

Even if a  CP2000 is issued , you can   explain that the total amount on the 1099-misc has indeed been accounted for on Schedule-E . Plus you have the back-up data to prove your point.

Is there more I can do for you ?

[syoung123]

Thank you for your reply.  I was waiting for additional info from the property management company before replying.

This property management company manages two of my rental properties.  They changed to a new accounting system in 2024 and put both rental properties in one account.  They just told me the rents for both properties were combined into one 1099 MISC.  They uploaded the 1099 data in an excel file to IRS electronically, so IRS has one total amount for both properties.  They do not send paper 1099s to IRS.  With the excel file upload, they cannot manually separate the combined total into two rents, one for each house, for IRS reporting.  So, I am still unclear that:

1.  Does IRS match the "Rents" reported on each 1099 Misc, whether reported via paper or electronically, to the "Rents received" line for each property listed on my Schedule E?

2.  Or, do they match total of all the 1099 MISCs under my social security number to the total rents of all the properties listed on my Schedule E?  I have four properties, the other two propertied are managed by different property management companies that issue their own 1099s.  In this case, I’ll have three 1099s reported by three management companies and four properties on my Schedule E.

3.  If IRS matches individual 1099 MISCs to each property listed on Schedule E, they would not be able to do so.  What would happen? And what do I need to do?

4.  I’ll need to separate the total rent amount on the 1099 electronically uploaded to IRS into two rent amounts myself, one for each property on Schedule E.  How would I enter the data to TurboTax?  Do I input the following -

Under TurboTax section - "Wages & Income", "1099-Misc and Other Common Income”, “Income from Form 1099-MISC" –

Enter the combined 1099 MISC (name, IDs, etc.) twice for each property, one 1099 with the rents for one property, the other 1099 with the rents for the second property on “Box 1 – Rents”?

Thank you for your help in advance.

[PatriciaV]

As long as you report as least as much rental income as is reported on Forms 1099-MISC Box 1-Rents, you should be fine. Use your own accounting records to show how you allocate the total to each property, which you can provide to the IRS if they have questions.

Enter rental income and expense from your books and records under each property address as you have in the past. You don't need to enter this information under the 1099-MISC topic in TurboTax. Under the rental income topic for Schedule E, TurboTax will provide a page for income reported on Form 1099-MISC.

[syoung123]

Thank you all for your help.