There are two different 1099 forms most applicable to rental businesses. Here is how Hemlane gets involved with each.
(This information is not intended to be and should not be construed as tax advice. You should consult your tax advisor regarding your reporting of these transactions.)
1099-K
Hemlane will file a 1099-K to the IRS if both of the following criteria are met within the tax year:
- You received over $20,000 in payment transactions (including rent) through Hemlane
- There was a total of 200 transactions
Both thresholds must be met. The Form 1099-K requires the reporting of gross transaction volume, and the reflected amount may be higher than your received payouts or profits. You can download your transactions in Hemlane on the Financials tab to learn more.
It is important to note that this only applies to payments processed online through Hemlane. If you were paid offline outside of Hemlane and simply recorded the transaction in Hemlane, we do not report it.
If you meet the criteria for Hemlane to file a 1099-K and have multiple LLCs that need to be separated out, please reach out to our team at support@hemlane.com and we can assist.
1099-MISC and 1099-NEC
Form 1099-MISC is generally used to report business payments over $600 to independent contractors. You most likely do not need to file a 1099-MISC if you are paying a corporation, paying via credit card, or paying online through a platform like Hemlane or PayPal. You can read the relevant instructions for 1099-MISC and 1099-NEC here.
Hemlane does not file or create the 1099-MISC on your behalf, as payments on our platform are covered by the 1099-K.
On Hemlane's Complete package, our team pays service professionals such as electricians upon completion of work. Since we pay service professionals through credit cards, debit cards, and third-party settlement organizations, you do not need to file a 1099-MISC with the IRS for these payments. This applies even if the amount paid to a service professional exceeds $600 during the year. This is an added benefit of using our online services.
Penalties for failing to file 1099 tax documents can be significant. We recommend reaching out to a real estate tax professional if you have any questions or need to confirm whether you are required to file any 1099 forms.
Here is a bit more information about the 1099-MISC and 1099-K if you are curious about the difference.
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