Got 1099-NEC for my rental property but do I report this as self-employment income in turbotax?

[tax2tax]

TT only mentions 1099-Misc for the rental property section and 1099-NEC goes to my ordinary income. The amount I got for 1099-Misc is from the tenant's company who moved out in mid-2020. The amount covered for the last month's rent, lease termination fees, and repair cost for floor water damage.

Due to it's treated as my ordinary income, my tax amount goes up a lot, and the costs I entered for the rental property covers only up to a certain amount (I guess $10k?) which should really be covered by the 1099-NEC money.

Is it okay to report 1099-NEC income against 1099-Misc for the rental property? Or, is there any special way to not pay incorrect tax? Any help would be appreciated. Thanks!

[RayW7 · Accepted solution]

The best solution would be to ask the payer to provide you with a 1099-MISC.  I would not recommend you report this as rental income and if you do, you should be prepared to justify your position. 

In answer to your question if the 1099 was strictly for rental income then it should be reported on a 1099-MISC and  you would include it on schedule E as 'Rental Income.'

However, if it included other income for work or material then you should report it as other income 1099-NEC.

1099-NEC

Use this form to report payments of $600 or more to gig workers, independent contractors, unincorporated service providers, and vendors (individuals or LLCs) that performed work for you related to the rental business. This can include:

Repairmen
Plumbers
Carpenters
Landscapers
HVAC professionals
Locksmiths
Cleaning services
COVID-related services such as sanitizing services

According to the IRS, 1099-MISC forms still are required for payments which include Rental Income.

1099-MISC:

The 1099-MISC form will now be used for two reasons a property management company will now use the 1099 MISC form is to report payments of over $600 in a calendar year for:

• Rent sent to owners (owner disbursements, also called owner distributions) and
• Attorney fees such as to handle an eviction or collect unpaid rent (even if the legal services were provided by a corporation). 

Beginning with the 2020 tax year, the IRS will require business taxpayers to report nonemployee compensation on the new Form 1099-NEC instead of on Form 1099-MISC. Businesses will need to use this form if they made payments totaling $600 or more to a nonemployee, such as an independent contractor.

[danh123]

Same thing happened to me. A commercial tenant sent me a 1099-NEC and it won't apply to my property in turbotax. I am going to have the tenant send me a 1099-MISC instead. It seems they issued me the wrong form.

[lrb54]

I got a 1099-NEC from the (County) government agency handling the Emergency Rental Assistance Program payments I received on behalf of my tenant. Fat chance of getting them to reissue it as a 1099-MISC though it was rent.

I see no other option at this point other than to treat it as a 1099-MISC to attribute the funds (rent) received to my rental property in TurboTax.  

[Vanessa A]

Yes, you will treat it as a 1099-MISC, however, you can include it with the sum total of your other rental income.  It does not have to be separately accounted for. Just keep the form, along with your return to show you did include it with your rental income. 

[npittock]

@Vanessa A  - I am in a similar situation.  I hired a different property management company last year for my 2 rental properties and they sent me a 1099-NEC.  The old property management company would send me a 1099-MISC.   If this new property management company is unwillling to change this to a 1099-MISC, should I just submit this 1099-NEC as a 1099-MISC (with their Fed TIN) under the "Other Common Income" section as rental income and save the form as proof?

Note:  I originally entered it as a 1099-NEC and TT showed it as "Self Employment Income" which I don't believe is correct from the research I've done as this is passive activity.

Thanks

[AbrahamT]

Report it as you would typically would report 1099MISC income. Keep this 1099NEC as backup for your records incase you will ever run into an issue down the road, you will explain to them what happened.