How to deduct rents I distribute to the landlord?

[carrie_wuli]

I manage a property for my cousin. When I receive rent from the tenant, I deduct my fee and distribute the remaining to my cousin. I received a 1099-MISC for all the rents and I can include them in the business income, but where in Turbo tax can I report the rents that I have distributed to my cousin? Is it under "Other Common Business Expenses" or somewhere else?

[KrisD15]

Yes, whichever expenses category you use, be sure to use the same one year after year. 

To clarify, if you collect the rent, who issues you the 1099-MISC? 

It seems like you would issue the 1099-MISC to your cousin. 

[carrie_wuli]

I receive the rent from the government because it's a Section 8 house. My cousin is outside the country, so I was the one that provided my W9 to the government. I assume I would be the one receiving a 1099MISC from the government and I would need to report that income on my tax, but I only kept a very small portion so need to find a place to deduct the rents I distributed.

[PatriciaV · Accepted solution]

Yes, you can report the amount sent to the actual owner as a miscellaneous business expense using a custom category description. To meet the IRS requirements, you should create and send Form 1099-MISC to your cousin for the funds he received, even though he may not file a US tax return.

To enter this expense in TurboTax:

1. Go to the Business Income section.
2. Choose the business you need to work on. Continue to the Business Summary page.
3. Scroll down to Business Expenses.
4. Click Start/Update beside Other Common Business Expenses.
5. Scroll to the bottom and click Start/Update beside Other Miscellaneous Expenses.
6. On the page "Any Miscellaneous Expenses?" enter the funds paid to the owner with a custom description.
7. Continue to the end to save your entries.

Note: If you enter a general business expense in the wrong category, it will not affect your taxes. Just be sure you don't enter the same expense twice.

[carrie_wuli]

Thank you. I'll do that!