1099 rent/ Lease payments for owner
How do you get a 1099 owner to show his rent / lease payment to himself to get just that total for his 1099?
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02/25/11 11:21am PST
Viewed by asker 03/03/11 5:17pm PST
Viewed by asker 03/03/11 5:17pm PST
6 Replies
JuliaNOTJulie3
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02/25/11 11:25am PST
The solution
When you pay the owner for the lease/rent, you should be paying him using the expense account (rent expense or lease expense). He should be listed as a vendor, and the box eligible for 1099 should be checked. Also, when you prepare your 1099's, in box 1, you will need to click on multiple and select the rent expense/lease expense account and put a check mark. Only the money paid to him for rent/lease will appear when you do the report in Step 3.
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Specializing QuickBooks accounting through financial statements! www.dbzequalcdz.com Advanced Certified QuickBooks ProAdvisor
03/03/11 3:25pm PST
Hi Julia,
We have our QB setup the same as you do, however QB does not give the correct amount for our 1099s because the amount paid to the owner is the NET proceeds but 1099s must be issued for the GROSS proceeds.
DETAILS:
We send property owners their rental income, posting the payment to an expense account. However, the amount we send the owners is, of course, the NET after paying the property expenses (such as gardening, management fee, etc).
Since the 1099 must be for GROSS rent received on their behalf, how do we get the correct amount on the 1099?
MORE DETAILS:
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We have each property owner set up as a vendor.
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Each month we write a check to the owner for their net proceeds. The check expense account is "Distribution to Owner" (type: Other Expense).
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The Cash Flow report properly shows the gross rent received, the expenses, and the net amount distributed to the owner.
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Mapping 1099 Box 1 to the income account "Rent" does not work -- the 1099 shows ZERO.
03/03/11 3:58pm PST
How do you deduct the expenses that are related to the vendor? The gross amount under distribution to owner needs to be the gross with adjustments listed on other lines.
Julia
03/03/11 4:15pm PST
The chart of accounts is set up like this:
Income:Rent (type: Income)
Expenses (type: Expense)
Gardening
Property Management
Distribution to owner (type: Other Expense)
and the Cash Flow statement looks like this:
Ordinary Income/Expenses
Income
Rent $1000
Total Income $1000
Expense
Gardening $50
Property managment $100
Total Expense $150
Net Ordinary Income $850
Other Income/Expense
Other Expense
Distributions to Owner $850 <-- check written to owner
Total Other Expense $850
Net Other Income -$850
Net Income $0
This works fine for us and the owners, except that we cannot get the GROSS rent to show on the 1099.
03/03/11 5:19pm PST
The correct way to record the reimbursement that you are receiving from the owner by deducting the expenses from his bill is as follows:
Enter the bill for $850.00, under account use Distributions to owner $1,000.00(which will then flow through to the 1099 correctly for gross income), on the next line you want to enter the expenses that were used Gardening -$50.00 and next line Property management -$100.00. This will net out to $850.00 when you pay the bill, the income will flow through to the owner in full, and your expenses for gardening and property management will be reduced, because they are being reimbursed.
Please mark the post Solved (if this helped), or click the "thumbs up", if this resolves your issue.
03/03/11 5:50pm PST
Latest post
Your suggestion may work but your wording has thrown me off, so let me confirm that we're on the same page:
We are a property management firm, collecting rents from tenants on behalf of the owner, paying expenses on behalf of the owner, and forwarding the net proceeds to the owner.
We are not receiving a reimbursement from the owner nor paying a bill from the owner, so your opening sentence has me scratching my head :-)
