The average rental property owner makes $97,000 per year. You'd be paying about 12% back in taxes with that income.
But, there are tax deductions, exceptions, and other rules to consider. And, you have to fill out different forms than typical employees.
Since there are many rules to keep track of, we've decided to break them down here. Keep reading to learn more about tax statements and 1099s for rental property owners.
Tax Statements and 1099s
If you were an employee of a standard company, you'd receive a W-2, which is a form that helps you report your income for each tax season.
On the other hand, rental property owners and other real estate investors receive 1099 forms. If you're interested in becoming a real estate investor, these tax statements will help you report your self-employment income. However, with 1099s, you have to report your interest, dividends, rental income, and more.
The 1099 Form helps self-employed individuals streamline tax filing by including the information you need to report. You must submit a 1099 Form if you earn more than $600 or more per year.
There is one downfall that many self-employed individuals don't like.
When regular employees receive a W-2, the company has already taken care of their taxes. With 1099s, you're reporting your gross/total income. So, you have to calculate how much you owe for tax purposes.
There is another form in real estate: the 1099-S Form. You should fill out this form if you've sold a rental property or home. It will help you record your income from the sale so that you can accurately pay capital gains tax.
How to Start Filing Taxes as a Rental Property Owner
If you're approaching tax season, you should get all of your financial information together. Keeping all of your financial documents in the same place can make it easier for you to collect them at the end of the year.
Once you've got everything together and it's time to file, start submitting your information electronically. You should file electronically as long as you can.
Paper filing will take much longer. And, any refund you might get will take longer to receive.
If you're not comfortable with submitting your own tax information, you should think about working with a tax expert, such as a tax advisor or certified public accountant (CPA). These experts can help you get the deductions and exemptions you're entitled to. You're likely to make the money you pay them back in taxes.
Start Making Money as a Rental Property Owner
Now that you've read up on tax statements and 1099s, it's time to scale your income while making taxes easier.
Property management services can help you make more money from your rental properties while managing your finances. You'll also be able to take care of more properties, scaling your income further. And, you can depend on your property management experts to help you during tax season.
We can help you identify deductions, work with contractors, and more.
If you're thinking about owning real estate in the Salt Lake City area, consider Home River Group for your property management company.