Form 1099 for rent: what tenants and landlords need to know

You can always count on the Internal Revenue Service (IRS) to remind you every year -- with their myriad of IRS forms -- that tax day is right around the corner.

One of the forms you'll receive in your mailbox in February is the tax Form 1099-Misc. As we'll see later, it can have a huge impact on your tax life. Turning a blind eye to it can lead to severe consequences, so it should be among your biggest priorities when tax season comes knocking.

That said, as a tenant or landlord, you should be properly acquainted with some common IRS forms and schedules before filing your taxes. So before we delve into the nitty-gritty details of form 1099 for property managers and occupants, we'll first look at some of the most common and essential IRS forms.

Let's get started.

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Common IRS forms and schedules

Amongst the numerous IRS forms out there, there are some that are more significant and every taxpayer needs to be aware of them. These include:

• Form 1040
• 1099-MISC
• W-2
• W-4
• Form 4868

Form 1040 and Form 1040-SR

The mother of all IRS forms, Form 1040 is the standard federal income tax form that people use to report their income, calculate the number of their tax bills or tax refunds for the year, and claim their tax deductions and credits.

Depending on whether or not you want to claim 1099 deductions and certain credits, some schedules may or may not be tacked onto that. These include:

• Schedule A ( Form 1040 or 1040-SR), Itemized deductions - used by filers to record itemized deductions.
• Schedule B ( Form 1040), Interest and Ordinary deductions - to report interests and ordinary dividend income.
• Schedule C ( Form 1040 or 1040-SR), Profit and Loss from Business (sole proprietorship) -used to report income or loss from a profession practiced or a business operated as a sole proprietorship.

Check out Bonsai's independent contractor expense tracker to help you automatically categorize and record your deductions.

The W-2: income from a job

The W-2 is sent to employees by their employers and it shows, among other things, how much your employee paid you during the year, the amount of taxes withheld on your behalf, and how much you have contributed to the company’s retirement plan. A copy of this form is also sent to the IRS.

The W-2 has a companion form, the W-4 which you fill in to reduce your withholding in a situation such as when you get a huge refund from the previous year. Check out our article comparing a 1099 versus a W-2.

Form 4868: to get an extension

For all those late tax filers, this is the form to get you out of a fix. You must however file this form by the April deadline so that you may be granted an extension until October. You will have to send an estimate of what you owe to the IRS along with your request for extension.

You should be aware that if the estimated payment you send in is less than what you owe, you’ll need to pay interest on the difference. If you miss your extension date, the IRS will slap a 5% penalty fee on you for every month your returns are late.

Who is subject to 1099 rental income reporting?

Landlords who receive rent from businesses

Landlords who rent property to businesses must report rental income using Form 1099-MISC or 1099-NEC, depending on the payment type. For the 2024 tax year, if a business pays $600 or more in rent, the landlord is subject to 1099 reporting requirements. This applies whether the landlord is an individual, partnership, or corporation.

For example, if you rent office space to a local startup and receive $1,200 in rent for 2024, you need to issue a 1099-MISC to the landlord if you are the business paying the rent. This ensures the IRS tracks rental income properly. Personal rentals to individuals, like renting a room to a friend, generally do not require 1099 reporting.

To comply, use accounting software such as QuickBooks, FreshBooks, or Xero to track payments and generate 1099 forms easily. Filing deadlines for 2024 forms are January 31, 2025, for furnishing to recipients and February 28, 2025, for IRS submission if filing by paper.

Businesses that pay rent to non-corporate landlords

Businesses that pay rent to individuals, partnerships, or LLCs not taxed as corporations must file Form 1099-MISC to report these payments. The IRS excludes corporations from this requirement except for attorneys and medical providers, so knowing the landlord's tax classification is crucial.

For instance, if your freelance business rents a studio from an individual landlord and pays $800 monthly, you must issue a 1099-MISC at year-end if total rent exceeds $600. To verify the landlord’s status, request a completed Form W-9 before making payments. This form provides the necessary taxpayer identification and entity type.

Using tools like HelloBonsai’s contract and tax form templates can simplify collecting W-9s and tracking payments. Staying organized reduces the risk of IRS penalties for failing to file required 1099s by the 2025 deadlines.

Exceptions and special cases in 1099 rental reporting

Some rental payments are exempt from 1099 reporting. Payments made to corporations typically do not require 1099-MISC forms, except for payments to attorneys or medical service providers. Additionally, rent paid for equipment or personal property leasing may fall under different IRS reporting rules.

For example, if you lease a copier from a corporation for your business, you generally do not need to issue a 1099 for those rental payments. However, if you rent a commercial property from a single-member LLC taxed as a disregarded entity, 1099 reporting is still required.

To avoid confusion, consult IRS Publication 15 (Circular E) or use tax software like TurboTax Business that flags exceptions automatically. Understanding these nuances helps freelancers and small businesses stay compliant without overreporting.

Which 1099 forms are used to report rental income?

Understanding the primary 1099 form for rental income

The main 1099 form used to report rental income is Form 1099-MISC. This form is specifically designed for reporting miscellaneous income, including rents paid to landlords or property owners. For the 2024 tax year, businesses and individuals who pay $600 or more in rent to a non-corporate entity must issue Form 1099-MISC to the recipient and the IRS.

For example, if you manage rental properties and collect rent from tenants, you typically do not issue a 1099 to yourself. However, if you pay rent to a property owner or landlord as a business expense, you must file Form 1099-MISC to report those payments. This ensures the IRS tracks rental income accurately for tax purposes.

To file Form 1099-MISC correctly, gather the recipient’s taxpayer identification number (TIN) using Form W-9 before issuing payments. Tools like the IRS’s Filing Information Returns Electronically (FIRE) system or tax software such as TurboTax and QuickBooks can help you file these forms efficiently.

When to use Form 1099-NEC versus 1099-MISC for rental payments

Form 1099-NEC is used to report nonemployee compensation, such as payments to independent contractors, but it is not appropriate for reporting rental income. Rental payments should always be reported on Form 1099-MISC, Box 1, which is specifically labeled for rents. Confusing these forms can lead to filing errors and IRS penalties.

For instance, if you hire a contractor to perform maintenance on your rental property, payments to that contractor should be reported on Form 1099-NEC if they exceed $600 in a calendar year. However, the rent you pay to the property owner remains reported on Form 1099-MISC. Keeping these distinctions clear helps maintain compliance.

Using accounting software like FreshBooks, Xero, or QuickBooks can help track payments separately and generate the correct 1099 forms. Always review the IRS instructions for each form annually, as reporting thresholds or box numbers may update for the 2024 tax year.

Exceptions and special cases in reporting rental income on 1099 forms

Not all rental income requires a 1099 form. For example, if you rent property to a corporation, you generally do not need to issue a 1099-MISC because corporations are exempt from receiving these forms for rent payments. This exemption also applies to LLCs taxed as corporations. Confirm the recipient’s business type using Form W-9 to avoid unnecessary filings.

Additionally, personal rental income, such as renting out a room in your home on platforms like Airbnb, is not reported using Form 1099-MISC by the payer. Instead, the platform may issue a Form 1099-K if your rental income exceeds certain thresholds. You must report this income on your tax return, but it is handled differently from traditional rent payments.

To stay compliant, maintain accurate records of all rental transactions and consult IRS Publication 527 for detailed guidance on rental income reporting. When in doubt, working with a tax professional or using specialized rental property software like Stessa can simplify managing these exceptions.

What types of income are considered rental income?

Income from leasing residential and commercial properties

Income from leasing residential or commercial properties is considered rental income for 1099 reporting purposes. This includes rent payments you receive from tenants for apartments, houses, office spaces, or retail locations. The IRS requires landlords to report these payments as rental income on Schedule E of their tax return.

For example, if you own a duplex and rent out both units, the total rent collected from both tenants counts as rental income. Even if you offer short-term leases or month-to-month agreements, those payments still qualify as rental income. Using property management software like Buildium or AppFolio can help track these payments accurately for tax reporting.

To stay compliant, make sure to issue Form 1099-MISC or 1099-NEC to service providers related to your rental property, but rental income from tenants themselves is reported on your personal or business tax return, not via 1099. Keep detailed records of all rent payments to simplify tax filing in 2024.

Additional fees and charges related to rental agreements

Additional fees connected to rental agreements, such as late payment fees, pet fees, or parking fees, are also considered rental income. These amounts must be included in your total rental income when filing taxes. The IRS views these fees as part of the overall compensation you receive from renting your property.

For instance, if a tenant pays $1,200 monthly rent plus a $50 monthly pet fee, your total rental income for that tenant is $1,250 per month. Landlords should use accounting tools like QuickBooks or FreshBooks to track these supplemental charges alongside base rent.

Remember to document all additional fees clearly in your lease agreements and maintain records of payments. This practice ensures you report accurate rental income figures and avoid potential IRS audits in 2024 and beyond.

Income from renting personal property and equipment

Income from renting personal property or equipment, such as tools, vehicles, or machinery, is also considered rental income and must be reported on your tax return. This type of rental income is separate from real estate rental income but still requires proper documentation and reporting.

For example, if you rent out a commercial van or construction equipment to clients, the payments you receive count as rental income. You should track these transactions using invoicing software like HelloBonsai or Wave to keep your records organized for tax purposes.

When reporting this income, use Schedule C if you are in the business of renting personal property, as the IRS treats it as business income. Keeping detailed invoices and payment records will help you accurately report your 2024 rental income and claim any related expenses.

How is rental income taxed for landlords and property managers?

Understanding taxable rental income

Rental income is fully taxable and must be reported on your tax return for the 2024 tax year. This includes all payments received from tenants, such as rent, advance rent, and any fees related to leasing. The IRS requires landlords and property managers to report this income even if they do not receive a Form 1099 for rent.

For example, if you collect $1,500 monthly rent from a tenant, your total taxable rental income for the year is $18,000. This amount should be reported on Schedule E (Form 1040), which is used for Supplemental Income and Loss. It’s important to keep detailed records of all rental payments to accurately report your income and avoid IRS penalties.

To ensure accuracy, use property management software like Buildium or AppFolio, which track rental payments and generate reports. These tools simplify the process of compiling your rental income for tax filing, saving time and reducing errors.

Deductible expenses that reduce taxable rental income

Landlords and property managers can deduct ordinary and necessary expenses related to rental properties to lower taxable income. Common deductible expenses include:

• Mortgage interest
• Property taxes
• Insurance
• Repairs
• Maintenance
• Property management fees

For instance, if you earn $18,000 in rental income but spend $5,000 on repairs and $3,000 on mortgage interest, your taxable rental income drops to $10,000. This deduction lowers your overall tax liability. Keep receipts and invoices for all expenses to support your deductions during an IRS audit.

Using accounting software like QuickBooks Self-Employed helps track these expenses throughout the year, making it easier to categorize and claim them on Schedule E. Regularly updating your records prevents last-minute stress during tax season.

How 1099 for rent forms affect tax reporting

Form 1099-MISC or 1099-NEC may be issued to landlords or property managers if they receive rent payments from businesses or individuals who are required to report these payments. However, many residential rental payments do not require a 1099 form. Regardless, you must report all rental income whether or not you receive a 1099.

For example, if you rent commercial space to a business, that business might send you a 1099-MISC showing the rent they paid. You should cross-check this amount with your records to ensure all income is reported. If you manage multiple properties, keeping organized records helps reconcile any discrepancies between 1099 forms and actual income received.

To stay compliant, consult IRS guidelines or use tax software like TurboTax or TaxAct, which prompt you to enter rental income and alert you if a 1099 form is expected. Accurate reporting prevents penalties and ensures you maximize deductions.

IRS form 1099-misc and its purpose

The IRS requires businesses to issue a 1099 form to all unincorporated entities for which they paid for services exceeding $600 in any tax year. This includes rental payments a company makes for their rental properties, such as office space, retail, and commercial space.

The payer is responsible for issuing Form 1099-MISC when they have paid $600 or more to an individual in a tax year.

What is form 1099-misc?

Form 1099 reports a year-end summary of all non-employee compensation. The four most common forms are:

• 1099-DIV, which reports dividends and distributions from investments
• 1099-INT, which reports interest earned on investments
• 1099-OID, for when you buy a note or bond for less than face value
• 1099-MISC or 1099-NEC, for income not acquired from investments, including self-employment income, rent, royalties, and crop insurance proceeds

The party who makes the payments is the one responsible for filling the form. The IRS has severe penalties for not filing 1099 forms.

The Internal Revenue Service (IRS) uses Form 1099 to capture miscellaneous income that might be forgotten when it comes to reporting and filing your yearly taxes.

Who needs form 1099?

A form 1099-MISC is not only for specific people. All kinds of people can get the form for various reasons as it is essentially a record of income.

You, as an individual, can receive a form 1099. This form will usually have your taxpayer identification number or your social security number on it. This means that the IRS will know that you have received the money. And, if you do not report the income on your tax return, the IRS will know too.

Independent contractors and freelancers, usually receive the 1099-Misc or the 1099-NEC from their clients. The money that has been paid to the contractor and freelancer by the client will be reflected on this form. Professional contractors who are listed as Limited Liability Corporations or LLCs are also regarded as 1099 vendors. This means that your business has to file 1099 forms for them.

1099 AirBNB hosts who runs a short-term rental business will also receive this tax form.

File 1099 for rent with tenants, landlords, and property managers

The current tax law defines receiving rental income as conducting the trade or business of renting out a property. This means that it is subject to Form 1099 reporting requirements. Tenants, landlords, and even property management companies, are often confused about when to send or receive IRS Form W-9 and whether to file IRS Form 1099. The help of a good accountant who is familiar with tax filing requirements comes in handy in such cases.

There is also the commonly used IRS Form W-9 which is a request for Taxpayer Identification Number and Certification. Sole proprietorship business owners and independent contractors will often have their clients request that you fill out and send a W-9. This is so that they are able to prepare your 1099-NEC form to report the payments they make to you. If you need more time to file your form, you can request a 1099 extension.

Property management requirements to file form 1099

The property management business has particular scenarios that determine how or when to use Form 1099. Follow these key guidelines if you're the manager of property for business or trade, a lessor, or lessee:

• If you manage property for business or trade
• If you are a lessor
• If you are a lessee

Tenants

Tenants in commercial leases and residential leases where they operate a trade or business from the property and pay a landlord more than $600 annually must obtain a W-9 from the landlord before paying. You are required to file Form 1099 if the W-9 shows that your landlord is not taxed as a corporation.

Landlords

If you have a commercial tenant that pays you over $600 of rent annually, you must supply them with your Form W-9. For any rental income you receive from your tenant, you are required to file Form 1099.

Mark you calendar for when forms are due so you can avoid an IRS 1099 late filing penalty.

Property management companies

The landlord should provide their property manager with a completed Form W-9. Property managers then file Form 1099 to report rent paid in excess of $600 during the tax year. Property managers are also required to do the same for all contractors not taxed as corporations who were hired and paid more than $600 over the year.

You must file a Form 1099 for your property manager’s service fees if you use one. These fees do not include reimbursed expenses. Although the property management company is responsible for issuing 1099s to all contractors they hire to maintain your property, you must provide a Form W-9 to your property manager.

The IRS requires both W-9 and 1099 forms. However, there are a few exceptions to the rule, including:

• For credit card payments and PayPal, the filing requirements do not apply as these payments are usually reported by the card issuers and third-party payment networks.
• If the rental property is owned by a corporation, a Form 1099 form is not required.
• You do not submit a W 9 form to your landlord if you are a commercial tenant and pay less than $600 of rent throughout the year.
• If you pay rent to a property management company or real estate agent instead of directly to a non-corporate landlord, your expense is not subject to Form 1099 filing requirements.

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How to handle real estate taxes

A Form W-9, when properly completed and signed, will typically indicate when the Form 1099 is required. This is to ensure that you have all the proper and necessary documents that you will need for your annual filing.

The Form 1099-NEC, the non-employee compensation form, must be mailed to recipients and filed with the IRS by January 31. Conversely, the Form 1099-MISC, which has reports of all other income, must be mailed to recipients and filed with the IRS by March 31. We recommend you use our organizer for tax receipts and maximize your real estate agent deductions.

Property managers, landlords, and owners with numerous properties must file a 1099 form and may have trouble with the filing process. With the help of a CPA familiar with tax filing requirements in the real estate rental industry, they can easily organize and streamline the process.