Rental Property Owners:
We need all clients that have a rental to complete the Schedule E Input Sheet for each rental. This will need to be filled out completely, if not then it will delay the preparation of your tax return. If you are already a client then you do not have to fill out the "FMV of Home or Purchase Price" or the "Value of Land".
Important INFORMATION for clients that have rentals (most qualify as a business and not investment activity):
- The basic rule is that you must file a 1099-NEC form with the IRS if you pay an unincorporated independent contractor $600 or more during a year for rental-related services. It makes no difference whether the sum was one payment for a single job or the total of many small payments for multiple jobs.
- Businesses use IRS Form 1099-NEC to report payments over $600 made to independent contractors (before 2021, Form 1099-NEC was used). If you're a landlord (own the property and collect the rent), questions have arised: do you need to file IRS Form 1099-NEC to report payments you make to independent contractors, such as property managers and repair people? Surprisingly, until recently, it has never been clear. Some people believed landlords didn't have to file 1099s at all. However, the IRS has recently made it clear that all landlords should file Form 1099-NEC.
- The reason a landlord should file Form 1099-NEC is to help the rental activity qualify as a business for tax purposes.
- Additionally, when your rental activity qualifies as a business, you get the best possible tax treatment when you sell your rental property. Any gains are treated as capital gains, which are subject to a lower tax rate than ordinary income. If you sell the property at a loss, you may deduct the loss without limit against all your income. Such losses are limited to $3,000 per year if your rental activity qualifies as an investment activity, not a business.
Elite Tax can file the 1099NEC's for you (charge is $20 per NEC), we will need a W-9 from the contractors (we recommend your get these before any work is completed) and the amount paid to each contractor. The 1099NEC forms are to be filed by Jan 31 of the following year of payments.
Schedule E Input Sheet (when clicking this, then you will fill this out online and submit back to Elite Tax)
To print form click here Might be easier if this is your first time completing