As a property manager, are you aware of what documents you need to file your taxes? Understanding the ins and outs of filing taxes is vital to your investment strategy.
Knowing what forms are required to file your taxes is a great place to start. This is an excellent way to ensure that your taxes are paid accurately and on time to maintain compliance with the IRS.
While this can be daunting, it doesn't have to be! We've covered you with this guide for tax statements and 1099s for property managers. Keep reading to learn more about taxes as a property manager.
Tax Statements and 1099s
A tax statement is an annual document issued by real estate companies or trusts. It's needed when they distribute income from investments in rental properties or other real estate investments. The statement shows how much income has been earned. It also shows how much income has gone toward taxes.
A tax statement will list other fees associated with owning and managing rental properties or REITs. It also provides information on any deductions taken throughout the year. This can include things such as mortgage interest deductions and depreciation expenses.
Additionally, it lists any capital gains or losses realized on properties sold during the year. Any deferred gains/losses resulting from like-kind exchanges under Section 1031 of the Internal Revenue Code (IRC) are also reported.
Finally, this statement may list any distributions made throughout the year. These distributions can be from various real estate holdings. For instance, dividends from REITs (Real Estate Investment Trusts) would be applicable.
Another essential tax document property managers must understand is a 1099 . A 1099 will include all income from rent and other sources, such as maintenance fees and security deposits collected from tenants throughout the year.
For example, if you have hired someone to work on or repair your property—a contractor, plumber, electrician, etc.—you must fill out a 1099 form at the end of the year. This lets the IRS know how much money was paid to those contractors so they can be taxed appropriately. The IRS also requires that a copy of the 1099 be sent directly to each contractor or vendor that was paid during the year.
Property owners need to keep accurate records of these items. The reason for this is that you want to be able to report them on the appropriate forms when filing taxes.
Property Managers & Taxes
A property manager needs to understand their tax obligations as business owners. In most cases, you will need to pay self-employment taxes. This also includes state and local taxes associated with your business activities.
Between the various deductions and potential credits available, it's important not to miss out on any potential savings. The last thing you want is incomplete or incorrect tax filings each year.
That's why it's always best practice to partner with an experienced CPA. They can ensure you're taking advantage of every deduction possible. The goal is to do this while staying compliant with all applicable laws and regulations.
Make Managing Property Taxes Easy
As a property manager, it is essential to understand your obligations when it comes time for tax season. Ensure all income generated throughout business operations is adequately accounted for. You want to avoid double taxation or unexpected penalties from federal or state taxation authorities.
Additionally, partnering with an experienced CPA who specializes in real estate law can help ensure accuracy and efficiency when preparing your annual returns each year!
If you're looking to make managing your rental property tax statements and 1099s easy, we can help. Our property management services help make your job easier as a rental property owner in the Greater Atlanta area. Contact our team to learn more about how we can help you!