Do I use 1099-MISC or 1099-NEC to report office rental payments to someone?

[mrpooh]

I'm self-employed and in the past I created 1099-MISC forms for rental payments for an office.   I would use TurboTax Quick Employer Forms to generate these forms.  I'd give a copy to the Landlord and file a copy with the IRS.  In the past, there was also a 1096 form along with it.

According to current guidelines, should I create a 1099-MISC or create a 1099-NEC form?   I'm not clear on what is for what.  And what about the old 1096 form?  Is that still in play these days?

Cheers

[Anonymous_ · Accepted solution]

Form 1099-MISC for rent (Box 1).

See also https://www.irs.gov/instructions/i1099gi#en_US_2022_publink1000286927

[mrpooh]

Thanks for your help.

That's what I have always done,

but I was reading about the different criteria and was thrown off by some of the language.

In the attached screenshot from this page: https://www.businessnewsdaily.com/payroll/1099-misc-vs-1099-nec ,

even though it's not really relevant, I was not sure who was being referred to in this language for NEC:

"Freelancer/contractor income and other payments likely subject to self-employment tax."

I was confused because everyone in this scenario, including myself, is subject to self-employment tax. 

I'm assuming that this refers to the freelancer/contractor who is receiving the payment and who would have to report that payment from me as self-employment income subject to taxes. 

Correct?

[DaveF1006]

To clarify, are you receiving payments for rent or are you paying rents for your office space because these are two different scenarios?

1. If you are receiving rents, this would be reported on your tax return as rental income. There may be a 1099 MISC issued to you by the payer reporting the rental income that was paid to you. Issuing a 1099 MISC for rent payments is not mandatory but assures accountability for IRS purposes.
2. In turn, if you pay rents for the rental of your office space, you may also issue a 1099 MISC to the recipient(s) of the rent payments. Rental management agencies will often issue 1099 MISC on behalf of their clients.
3. 1099 NEC is used to perform earned income that is paid to contractors.  If you hire a contractor to paint a house, perform plumbing services, remodel a house etc. or other "active" services, you would issue a 1099 NEC to that contractor for the work performed.  You would not issue or expect to receive a a 1099 NEC for rental payments. With this said, I have seen 1099 NEC issued for rental payments and this type of reporting is incorrect for IRS purposes
4. Keep in mind, rental income received as an investor is not self-employed income and is not subject to self-employed taxes. If you are an investor that buys and sells real estate for yourself, you are strictly an investor, not subject to self-employed taxes.

Please respond back if you need further clarification. What is germane to your question is if you are receiving or paying rent payments and if you are in the business of investing and managing real estate. Once the exact scope of your income source is determined, we can provide a concise solution to your concern.

@mrpooh

[mrpooh]

Greetings,

To clarify, I am the one paying the rent to another named individual.

I thought we were all considered self-employed, but I see how you are framing a landlord's business as a different business model (investor) with different tax implications.

Thank you also for elaborating on how these different tax forms (1099 MISC vs 1099 NEC) may be incorrectly used for opposite purposes as far as the IRS is concerned and intended.  Your word seems to make sense as a more reliable truth, combined with what else I have been reading.

Thanks for your thorough response.  I truly appreciate it!

Cheers