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Ask the taxgirl: 1099 for Rent

February 10, 2009 · 12 comments

Taxpayer asks:

I am a sole prop and paid rent to an accountant who is a professional corporation. Do I need to 1099 him?

Taxgirl says:

No, you generally don’t issue a form 1099 for rental payments made to corporations (there are some exceptions). For more on when a form 1099 might be appropriate, check out my prior post about when to issue a 1099.

Like any good lawyer, I need to add a disclaimer: Unfortunately, it is impossible to give comprehensive tax advice over the internet, no matter how well researched or written. Before relying on any information given on this site, contact a tax professional to discuss your particular situation.

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{ 12 comments… read them below or add one }

1 Kelly February 11, 2009 at 9:01 pm

I’ve received a couple of follow-up questions to this post so I wanted to post a bit more…

Payments made for rental payments are not reportable on a form 1099-MISC if paid to a corporation or to a real estate agent. You may need to report rental payments made to an individual or partnership. However, a PC or other corporation in the name of an individual, as above, is not considered an individual for this purposes.

You do not need to report personal/residential rental payments (ever) on a form 1099-MISC. Only those payments associated with your trade or business are reportable.

2 Kelly February 11, 2009 at 9:26 pm

I received another question re rents and LLCs. I didn’t want to create a separate post for it so I thought I’d tack it on here…

An LLC can be a partnership, corporation or single member LLC (disregarded entity). LLCs which are corporations would not receive a form 1099-MISC for rents. LLCs which are taxed as a partnership or as a disregarded entity may be subject to a form 1099-MISC. Check the form W-9 if you’re not sure. If you don’t have one and you’re concerned, then issue the 1099-MISC. It can’t hurt.

Remember, however, that this applies to commercial/business rentals only. I keep getting questions about personal/residential rentals – no, no, no. You don’t need to issue a form 1099 for those.

3 SUE WONG August 28, 2009 at 11:37 am

The compnay paid the rent to commercial property owner who is also the S corp owner and employee. Does the company need to issue 1099 to the owner(employee)?? The owner did report the rental income in 1040 without the 1099.
Thank you very much for the help

4 tk September 10, 2009 at 3:38 pm

If the Company is paying a landlord for executive housing for those executives that do not live in the corporate city, does the company issue the 1099-Misc to the landlord (who is not a corp or a real estate agent)? Does the answer to this question depend on whether the company is incurring this expense or whether they are then taxing this benefit to the executive?

Thanks!
-accountant in Tempe

5 Last MInute Lucy January 29, 2010 at 1:56 pm

Hi Taxgirl! Just wondering how to treat payments to the owner of a web domain? We pay monthly payments to the owner of a URL for use by my company. I am unsure how these payments should be reported on the 1099 form. Would the payments be considered as rent and reported in box 1? Or can I report them in box 7 on the 1099 form? Thank you for your help!

6 david February 2, 2010 at 2:57 pm

Does equipment rental apply under the RENTS classification or is this real property only?

Thanks for your help

7 Kelly February 2, 2010 at 4:42 pm

Machine rentals, etc., apply, too. So the answer is yes.

8 Mari February 4, 2010 at 1:24 pm

Our company pays rent for clients who are back in their rent payments. Usually this is one shot deal to the landlords but there are multiple clients and landlords (amount over $600). Do I use box 1 or box 7? Also what happens if you accidentially issued a 1099 to vendor for rent on box 7? Thanks

9 MJ February 25, 2010 at 1:35 am

Did you answer Mari? Because I have the very same question. My sister is a booking agent and her highly paid professional accountant filled out her forms once putting the payments in Box 7 of the 1099. So, later years, she did the same. But one individual came back and said it needed to be in Box 1. Should 1099′s be reissued using Box 1?

10 mary December 9, 2010 at 8:12 pm

Can I 1099 a company we pay rent to who is a Corp; INC or Medical with INC and CORP.

If not please direct me. Thanks

11 Greg M February 29, 2012 at 10:10 pm

I have tax clients who are beauticians and pay rent to an individual or LLC, not a corporation – the shop owner – for their ‘space.’

I also have an auto repair shop owner who pays rent to himself. He holds the property in an LLC, disregarded entity. The rental income is reported in his personal tax return on Schedule E.

Do either have file a 1099misc.

12 kluke April 30, 2012 at 11:54 am

In 2011, we started collecting rent on our extra home from a family.

I reported the rent as rental income on my personal tax return. I did not receive a 1099-MISC or anything.

They now were advised by their accountant for their small home business that the business should pay 25% of the rent and the family pay the rest via two checks

Will that mean I would get a 1099-MISC from the family and on from the small business?

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