Property Managers Manage Tax Season Stress for Property Owners
Tax time is typically a stressful time for rental property owners, especially those that aren’t well versed in those specific tax rules involving investment real estate. Luckily, employing a knowledgeable property manager such as Martin Feinberg can help make tax season more bearable and less of a financial strain.
One of the primary responsibilities of a professional property manager is to help an owner stay compliant with local and state tax laws. All businesses and properties have tax documents and payments each year. Most property management companies take care of this paperwork for their clients. They file rental sales tax on time and can also keep track of tax documents, tax law updates, and changes to reporting guidelines that will affect the property owner or the property itself. This can be a huge benefit to property owners that are new to rental and investment property ownership, especially during tax season.
Property managers are especially helpful in handling 1099-MISC forms. 1099 forms are how the IRS keeps track of income sources not recorded on traditional W-2 forms. The deadlines associated with 1099 forms are strict and a good property manager will help make sure these forms go out on time. In most cases, the deadline to provide a 1099 to a recipient is January 31st.
The rules governing who should get a 1099-MISC from a property manager are fairly simple. In basic terms, a property manager should file a 1099-MISC form for anyone they paid more than $600 to throughout the course of the year, that isn’t a corporation. This includes owners as well as independent contractors such as repairmen, plumbers, carpenters, landscapers, and attorneys. Missing the deadline can be very expensive.
Not all private landlords are required to report 1099 income paid to service providers. Because the penalties for not filing a 1099-MISC are so severe, rental property owners that do no utilize a property manager should always consult with an attorney or tax professional during tax season who is family with rent real estate tax requirements to make sure they are in compliance with their area tax laws.