Property manager received Jan rent in Dec and recorded it on the 1099-misc as 2016 income, even though he didnt deposit proceeds into my account until 2017.Is he right?

[DianeW · Accepted solution]

Yes, for the property manager side of things.  And if the property manager actually released the funds to you in December, regardless of the fact they show up in your account in January, they would complete the Form 1099-MISC that way.  The exact date isn't shown above, but you know if there was time for this scenario to have happened.

On your side of this transaction, you are required to report the income you actually received in 2016, you do not have to report the income that wasn't received until January.  The January income should be reported on the 2017 tax return, regardless of what is on the Form 1099-MISC.  

Keep very accurate records for yourself so that you include this on your 2017 return.

[rk444]

Just stumbled upon this post as I have the exact same scenario for tax year 2021.

So For my side of this transaction, if I do as DianeW suggested, wouldn’t there be a mismatch between the 1099-MISC reported rent amount (which will be higher since its report rent for 13 months) and what I report my tax return (which will be lower since only reporting 12 months)?

As the 1099-MISC was submitted to IRS by the property manager, wouldn't this mismatch trigger a tax audit for me?

[MarilynG]

The difference between the 1099-Misc and your actual rent received in 2021 would not necessarily trigger an IRS audit, if you have documentation that you didn't receive the rent paid in December 2021 until January 2022 (bank statement).

However, under the rules of  'constructive receipt' you are considered to have received the amount when your agent receives it, even if it was not immediately available to you. 

Remember, it will balance out, because the 1099-Misc for 2022 will be less than you expected. 

Per IRS Pub 538:

"Income is constructively received when an amount is credited to your account or made available to you without restriction. You do not need to have possession of it.  If you authorize someone to be your agent and receive income for you, you are considered to have received it when your agent receives it."

@rk444

[T-S1]

We have just experienced something similar for the 2022 tax year. Our property manager did not report in financial payments or pay us about $15,000 in income (most of this was amount was from the local covid rental assistance program).

She received this income in 2022 but did not report it to us or pay us until October 2023. She has just changed our 2022 financial reports  to reflect this income as having been received in 2022. However, we already filed our taxes for 2022 using the financial reports that were available to us at the time, which does not include the extra income she is now reporting for 2022.  Basic question is, if we did not receive that income from her in 2022, do we have to report it as 2022 income? She received it in 2022, but did not add it to our  financial reports or pay us until late in 2023. We did not receive the income into our business bank account until 2023. Do we need to file a tax amendment for 2022, or can we count this as 2023 income? We are keeping clear records of what has been changed in her financial reports since we filed our 2022 tax forms.