The Top Property Management Newsletter and Events for January 2023
Happy New Year – 2023
Looking forward to a Great Year as Your Property Management Experts
Thank you for letting us into your mailbox to share ideas and tips to maximize your experience as a landlord or REALTOR®.
3 Home Goals for Next Year
(and some 1099 business tips)
It is also time to bring you a round up of the latest news, ideas and tips to maximize your experience as a landlord or REALTOR®.
Happy New Year!
The New Year is finally here and with that means tons of resolutions to make this year, the best one yet! Most people are so focused on personal health and finances, that it doesn’t occur to them to create resolutions in other areas of their life.
One area you should consider setting some resolutions for is home improvement. Now is the perfect time to set some goals to help you better manage and care for your property.
3 New Year’s Resolutions You Need to Make for Your Home
- Adjust Your Spending Habits
I don’t know about you, but everyone I know could use some extra money. By doubling up on or paying extra each month on your mortgage, you can save yourself literally thousands of dollars of interest and pay off your home much faster. If you really sat down and took a deep look, I bet there are some areas you could cut costs and assign that money toward your mortgage.
- Finish Those To-Do Lists
Have an unfinished basement or some uninstalled flooring? You aren’t alone! It’s so common for homeowners to start a project and then never finish because of poor planning. Whether life got in the way or you ran out of money consider making a plan to finish any projects on your to-do list. Setting a budget and deadlines will help you stay accountable. What’s even better is, those projects once finished are probably going to increase the value of your home. So if you’re considering selling at some point, leaving them unfinished is literally like leaving money on the table.
- Be Smart With Energy Usage
It may seem silly, but taking a few minutes a day to turn off lights, check doors and windows or adjust the thermostat will help you avoid high electricity bills and help save you on maintenance fees from wearing your home out faster than necessary. If remembering the small stuff is something that you struggle with, consider using smart home devices to manage these tasks remotely. It can save you time and money!
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What Is an IRS 1099 Form? Who Gets One and How It Works
A 1099 form is a record that an entity or person (not your employer) gave or paid you money. See how 1099s work.
What Is Form 1099?
While there are many types of 1099 forms, they all serve the same purpose; they are used by taxpayers to provide information to the Internal Revenue Service (IRS) about all of the different types of income they receive throughout the year outside of their regular salary. This type of income is also referred to as income from non-employment-related sources. Taxpayers need to report all outside income to the IRS in order to avoid an audit. This income may include interest from your bank, dividends from investments, or compensation for freelance work.
The IRS 1099 Form is a collection of tax forms documenting different types of payments made by an individual or a business that typically isn’t your employer. The payer fills out the form with the appropriate details and sends copies to you and the IRS, reporting payments made during the tax year. In some instances, a copy must also be sent to your state taxing authority. The payer is responsible for filling out the appropriate 1099 tax form and sending it to you. Such payments can be for rental income, earnings working as a freelancer or independent contractor, a tax refund received from your state or locality, gambling winnings, and more. Most 1099 forms are required to be provided by January 31, but in certain instances, this date is February 15.
Issuers of 1099 forms must send one copy to the IRS and another copy to the taxpayer, or the recipient of these payments. Some issuers send out 1099s by mail, while others provide them electronically. A 1099 tax form (or more than one) might land in your mailbox sometime in February. You need to hang on to it because it can have a big impact on your tax life.
What does a 1099 employee mean?
The phrase “1099 employee” generally describes a person who, in the eyes of the IRS, is an independent contractor, also called self-employed or a freelancer. A 1099 is thus not the same as a W-2, which reports income paid to employees. If you get a 1099 from your employer, that’s a sign that your employer sees you as an independent contractor rather than an employee. Workplaces aren’t the only entities that may send you a 1099, though.
What is a 1099 form used for?
You use your IRS Form 1099s to figure out how much income you received during the year and what kind of income it was. You’ll report that income in different places on your tax return, depending on what kind of income it was. If you need help estimating how income on a Form 1099 could affect your tax bill, check out this handy tax calculator from Nerd Wallets: tax calculator.
Who gets a 1099 form?
A 1099 form is a record of income. All kinds of people can get a 1099 form for different reasons.
- For example, freelancers and independent contractors often get a 1099-NEC from their clients. The form reflects the money the client has paid the freelancer or independent contractor. (Check out some tax deductions that could offset some of that income.)
- A Form 1099 will have your Social Security number or taxpayer identification number on it, which means the IRS will know you’ve received money — and it will know if you don’t report that income on your tax return.
Do I need a 1099 form to file my taxes?
Simply receiving a 1099 tax form doesn’t necessarily mean you owe taxes on that money. You might have deductions that offset the income, or some or all of it might be sheltered based on the characteristics of the asset that generated it. In any case, remember: The IRS knows about it.
The Two Most Common 1099 Forms: 1099-NEC and the 1099-MISC
1099-NEC vs. 1099-MISC
What is the difference between the 1099-NEC and 1099-MISC forms? Prior to the 2020 tax year, as a business owner who hired contractors, you dealt primarily with Form-1099 MISC for reporting non-employee compensation. Starting in 2020, the IRS chose to reintroduce the 1099-NEC Form as the new way to report self-employment income instead of using Form 1099-MISC. This was done in part to help clarify that there is a separate filing deadline for non-employee compensation than the deadlines for other payments that use Form 1099-MISC.
Non-employee compensation can include any compensation received for any services performed while not being treated as an employee. In contrast, as an employee, your compensation is typically reported on a Form W-2.
Now, Form 1099-NEC reports non-employee compensation but the 1099-MISC still exists to report other types of miscellaneous income.
1099-NEC: Nonemployee Compensation
For reporting non-employee compensation such as income earned as an independent contractor, freelancer, or self-employed individual.
- Due Date to Recipient: February 1
- Due Date to IRS: February 1
Example: Worked as a rideshare driver, food delivery person, freelance writer, or other gig worker or independent contractor.
1099-MISC: Miscellaneous Information
For payments you receive like rent, royalties, prizes and awards, substitute payments in lieu of dividends, medical and health care payments, crop insurance proceeds, and other items.
- Due Date to Recipient: February 1 (or February 16 if substitute dividends and tax-exempt interest payments reportable by brokers or gross proceeds paid to attorneys)
- Due Date to IRS: February 28 (or March 31 if filed electronically)
Example: Received rent payments for property you lease
What to do if you don’t get all of your 1099 forms
Even if you don’t have the appropriate forms, you’re still responsible for paying the taxes you owe. If you didn’t receive a 1099, you need to report the income received on your tax return in order to avoid a bill from the IRS for owed taxes and possible penalties.
If you haven’t received all of your 1099s by the January 31st or February 15th deadlines, contact the person or business responsible for sending you the 1099. Request that they send you a copy of your 1099 so you may file your tax return on time.
Great customer service is the key to having a Happy New Year!
If you are looking for a Property Management Company that can help you provide excellent customer service for you leasing clients, give us a call at Polaris Property Management.
TOTIN’ CHIP Cards & Real Estate Investing in 2023
If you recognize this card, you’ve either been a Boy Scout or had a child in Scouting. Before any Scout can use or even carry a pocketknife, he Scout must learn how to safely use each tool so he doesn’t end up injuring himself….or others near him.
Yeah, the Boy Scouts have discovered something here that works….applied knowledge.
Boy Scouts respect the awesome power in a simple pocket knife to whittle, carve, or make an implement necessary to survive. They also know which tool to use in a situation….a hatchet for one job is better than a saw for another. But if there’s any question or confusion, there’s always a helpful Scout Leader nearby….
Like experienced Boy Scouts, I’ve found over the years that experienced Real Estate Investors also know how to use tools safely and responsibly. They know how to properly complete risk profiles on their tenants and a thorough lease agreement, etc….
They also value access to experienced Leaders who gladly assist in solving those unique problems so they don’t end up with needing to break out the First Aid kit.
If you are a Landlord who has not earned your real estate Totin’ Chip card please make it a point to acquire that applied knowledge soon.
it is soooooo much more fun when you have the right tools and knowledge – and make more money!
If you need help, there’s always a helpful Scout Leader nearby to assist you.
Scout Leader to Investors
If you own property, or are thinking about investing, and would like to discuss steps to obtain your own financial independence through property ownership and professional property management, please contact us today: Dan@PolarisManage.com