Property manager Income back to homeowner

[klopuppyluv]

I am a property manager basically a middle man and collect rents and then distribute them back to the property owners (minus my fee/my income).  I am confused on if I count this as income for my business.  If I do, then where do I count it as an expense.  For example, I collected 15K in rents for a property, and returned all the rents then deducted my income (fee) of $2000 for my services (my actual income).  I will be issuing this property owner a 1099-MSC for them to claim the 15K of income on their taxes, but where do I enter it going back out of my business because it is not my income.  I know I am not the only property manager that does it this way.

[MarilynG1]

You would issue the property owner a 1099-Misc for 13K, since that is what they actually received from you (after your 2K fee).  They will claim 15K rent received, and a Property Manager expense of 2K on their return.

You will file a Schedule C with your return for your self-employment income.  You can deduct expenses against this income (such as mileage, cell phone, supplies, home office, for example).

Type 'Schedule C' in the Search area to  'Jump To'  this area in TurboTax, or under Wages & Income, scroll down to Business Items > Business Income and Expenses (Sch C) to set up your business.

Here's some detailed info with useful links for Self Employment. 

[klopuppyluv]

So do I only claim the 2K in income and not the the full amount that went into my accounts the 15K?  This is where I get confused on what to claim. I think I only claim my income and then issue them the 1099 msc.  

[AmyC]

Yes, you only claim your income as rental manager. Issue a 1099-MISC and the IRS can see the amount you received was not all kept.

[FOMOCOLOVESU]

How do the new rules around 1099-ks from Airbnb/Vrbo impact this?

Lets assume I have $100k in revenue and get a 1099-k from Airbnb.  I pay the owner $90k and issue a 1099-MISC.

Don't I now need to show the $90k offsetting the $100k?  So my schedule C revenue would be the full $100k in income and then deduct the payment to the owners with my other expenses?

[DawnC]

Yes, exactly.   The 90K will be an expense on your Schedule C which reduces your taxable income on Schedule C.  

[FOMOCOLOVESU]

Thank you!

There doesn't seem to be a clear place in Turbo Tax to record it.  Should it just go under MISC?

Alternatively, can I just deduct it from income and classify it as "Income You Gave Back" in the income section?

[MarilynG1]

You will set up a Business in TurboTax.  Go to Self-Employment or Business in the Wages & Income Section to begin. 

Once you have set up your Business, you'll be asked to 'Add Income for this Business'.  That's where you enter your 1099-K.

Then you're asked to 'Add Expenses for this Business', where you can deduct what you paid the owner, plus any related expenses, such as mileage, cell phone, internet, home office, etc.

You could record the expense for what you gave the owner as a Miscellaneous Expense (Rent Paid to Property Owner), but 'Income You Gave Back' refers to income you received (from selling something, for example) and had to 'give back' because item was returned, so that wouldn't be appropriate, as you're not returning the income to the person who paid it to you. 

Here's more info on Top Tax Write Offs for the Self Employed.

@FOMOCOLOVESU