According to the New York Post, the Internal Revenue Service (IRS) levied $7 billion in tax penalties in 2023. During the previous year, they only amounted to $1.8 billion, almost four times less. Business owners were among those hit the hardest.
If you're considering becoming a landlord and in-house property manager in Marietta, GA, you'll also technically be a business owner. As such, you must file the correct tax statements and 1099s; otherwise, you risk facing hefty IRS penalties.
If you're unsure where to start, don't worry. Our team of property management experts at PMI Cobb created this guide on rental income tax reporting and 1099 requirements, so read on.
What Are Rental Property Tax Statements and 1099s?
As a rental property owner and in-house manager, you'll handle several types of tax documents, including:
- 1099-MISC for rental payments you've received
- 1099-K for payments made to you via online methods, such as PayPal
- 1099-NEC for payments you've made to vendors and contractors
- Property tax forms for your Georgia rental property
Preparing and filing the correct tax forms for your rental business is vital to avoid hefty fines and penalties for violating tax laws.
For example, per the IRS, understating tax liabilities can result in fines of up to $5,000 or 10% of the liability required to appear on the tax return, whichever is higher. For accuracy-related errors, the penalty is 20% of the underpayment of tax caused by disregard or negligence.
Can You Outsource the Financial Management of Rental Properties?
Absolutely!
If you hire a third-party rental property management company, they'll handle most of your financial tasks. They'll prepare your tax statements and 1099s and promptly collect rental payments on your behalf. They'll also do the following to simplify accounting and financial reporting:
- Pay and record vendor and contractor bills
- Account for other operating expenses, including property marketing, maintenance, and repairs
- Generate and send you monthly owner disbursements
- Record all non-rent payments (e.g., security deposits, interests on deposits, late rent fees, etc.)
- Provide status updates with monthly owner statements and reports
How you'll get the above depends on the processes of the property manager you choose. If you partner with our property management firm, PMI Cobb, you'll get access to them via your online landlord portal.
The online portal also lets you perform other document and financial-related tasks, such as signing paperwork and viewing fund transfers. The convenient platform also allows you to file or view maintenance requests.
Let PMI Cobb Manage Your Rental Property's Finances
Timely and proper filing of tax statements and 1099s for your Marietta, GA, rental business is crucial to avoiding legal IRS liabilities. So, if you're not 100% confident about your accounting and financial recordkeeping abilities, consider outsourcing these tasks to the pros.
PMI Cobb is your go-to for all your real estate asset management needs. From marketing to tenant placement, accounting, and financial reporting, we can do all these and more on your behalf. Our team consists of expert property managers headed by Chase Fortenberry, our company's owner, who brings over 30 years of professional management experience.
Speak with us today to request your free, non-obligatory rental property analysis!
