There are two different 1099 forms that are most applicable to rental businesses. Here is some information about how Hemlane gets involved with your taxes.
Hemlane will file a 1099-K to the IRS if the following criteria are both met within the tax year:
- You received over $600 of payment transactions (incl. rent) through Hemlane AND
- Hemlane has processed 1 or more transactions for you
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 very important to note that this only applies to payments processed online, through Hemlane. If you were paid offline (outside of Hemlane) and record a transaction in Hemlane, then we do not report it.
Please note: If you meet the criteria for Hemlane to file a 1099-K and you have multiple LLCs that need to be separated out, please reach out to our team at firstname.lastname@example.org and our team 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 the 1099-MISC if you are paying a corporation, paying via a credit card, or paying online through an app like Hemlane or PayPal. You can read the 2023 1099-MISC and 1099-NEC instructions here. Hemlane does not file or create the 1099-MISC for you, since payments on our platform are covered by the 1099-K.
On Hemlane's Complete package, our team pays service professionals (e.g. electrician) 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. This is even true if the amount paid to the service professional is over $600 during the year. This is an added benefit of our online services!
Penalties for failing to file 1099 tax documents can be high, and we recommend reaching out to your real estate tax professional if you have questions and to confirm whether you need to file any 1099 forms.
Here is a bit more information about the 1099-MISC and 1099-K, in case you are curious about the difference.
(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.)
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