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Step-by-step best practices to report rental payments (≥ $600) to non-corporate landlords
IRS Form 1099-MISC (Miscellaneous Information) is used by businesses to report various types of payments made throughout the year that don't fit into other specific 1099 categories.
When reporting miscellaneous payments on 1099-MISC, one particular reporting requirement, Box 1, is often overlooked. This box reports rental payments of $600 or more made to individuals or entities.
Whether you're leasing property from a landlord, leasing land, or paying for temporary equipment rentals, 1099-MISC Box 1 reports these payments and missing them can trigger IRS penalties and audits.
Understanding why 1099-MISC Box 1 matters, who needs to file it, penalties for filing late, how to calculate rental payments, etc. are essential for staying compliant with IRS regulations.
If you are renting a commercial property, you need to report it on Form 1099-MISC Box 1.
Any trade or business must use Form 1099-MISC Box 1 to report rent payments made for real estate, machine rentals, pasture rentals, and any other rental assistance payments to the IRS.
The minimum reporting threshold is $600 in cash or kind. If a rental payment to a non-corporate recipient exceeds $600, it must be reported on Box 1 of IRS Form 1099-MISC.
The IRS filing deadline for 1099-MISC is February 28 for paper filing and March 31 for e-filing. The recipient copy distribution due date is January 31. You must pay a penalty if you fail to file before these deadlines. The amount will depend on the number of days you've missed out on filing.
The penalty for late filing that does not exceed 30 days is $60 per form. A filing that is past 30 days but not exceeding August 31 costs $130 per form. After August 1, if filing is still not done, the penalty can go up to $330 per form.
There is also a penalty for intentional disregard or failure of foreign disregarded entities (FDEs) or foreign-owned U.S. disregarded entities (DEs). This penalty is the greater of $25,000 or $600 per form.
Late or incorrect 1099-MISC filings can result in hefty penalties. With Tax1099, you can bulk file, TIN match or check errors with our in-built tools. You can also schedule form filings in advance to meet deadlines and get reminders that will keep you on track.
Retain filed 1099-MISC and W-9s for at least four years. This helps ensure compliance with IRS regulations and protects against penalties or disputes during IRS audits.
IRS Form 1099 MISC for rental property owners is filed by a business or an entity (payer) that has made payments worth equal to or more than $600 during the course of a year.
However, not all payments are required on Box 1. There are a few exceptions, including:
The total rent and lease-related items paid by a business to a non-corporate payee that is worth more or equal to $600/year. This amount (rental) is reported as 1099 MISC Rental Income.
The 1099 MISC for rental property form includes the total amount of cash rent + tenant-paid utilities/CAM fees/late fees + fair-market value of in-kind payments (if part of lease).
The payer is the business that files whereas the recipient is the non-corporate landlord/owner who receives a copy of the form.
For the 2025 tax year (to be filed in 2026), the IRS is lowering the threshold for 1099-K reporting to $600 (may be subject to further IRS adjustments) for goods or services payment via a third-party payment app or platform. However, regardless of the 1099-K threshold, if rent payments to a non-corporate landlord are made directly by the business payer (not via a third-party payment network like PayPal, Stripe, etc.), and the total rent is $600 or more, the business payer remains responsible for issuing Form 1099-MISC.
Obtain a signed Form W-9 from each landlord/owner, vendor, or service provider to ensure the captured legal name, address, and TIN are correct before making payments. You can request updated W-9s periodically or if the information has changed.
Use IRS TIN Match (if enrolled) or rely on IRS-authorized e-file software like Tax1099 for their built-in TIN checks to verify TIN and name combinations against IRS records. If an invalid TIN/name combo has been detected, it can be corrected immediately to avoid rejected filings.
Verify the recipient or entity type (individual, partnership, LLC, etc). The information must be the same as reported on W-9. Note: The recipient shouldn’t be a corporation.
To comply with audit requirements, make sure you store all filed copies of W-9s, 1099s, and payment documentation in a secure digital folder for at least 4 years after successful filing or IRS due date.
Keep detailed records of payments made during the year, including dates, amounts, and payment methods.
Check whether your state requires 1099-MISC forms separately or participates in the Combined Federal/State Filing Program (CFSF) and comply with any additional state filing mandates.
The 1099 MISC Rental Income reporting requires you to sum up all the rent payments (e.g., $1,200 × 12 months = $14,400) made to the landlord or property owner in a calendar year, including regular monthly payments, advance payments, etc.
Include tenant-paid fees that are reimbursed to the landlord, such as utilities, common area maintenance, late fees, and lease modification/cancellation fees.
If the landlord accepts goods or services instead of cash as rent payments, report the fair market value of those goods or services as your 1099 MISC Rental Income.
Security deposits, reimbursements for repairs, and personal rent payments are not added to 1099-MISC Box 1.
To complete 1099-MISC Box 1, you need the following information:
The recipient (payee) is the landlord receiving the rental payment. You'll need their full legal name, complete mailing address, Taxpayer Identification Number (TIN) obtained via a signed Form W-9, and business entity type (individual, partnership, corporation, LLC, etc.).
The payer here refers to the businesses or entities making the rental payments. It includes the legal name of the business or entity, business address, Employer Identification Number (EIN), or Taxpayer Identification Number (TIN).
The total amount of rent paid during the tax year (if ≥ $600). This includes payment for office or commercial space, machine rentals, or pasture land rentals. The payment includes both fees and in-kind values (goods or services).
If backup withholding applies due to incorrect or missing TIN or other IRS backup withholding rules, complete Box 4.
An account number is required if multiple accounts exist for a single recipient. The IRS also requires you to check the box for the Foreign Account Tax Compliance Act (FACTA) if it applies.
No signature is required on either paper or e-filed copies.
Please note:If the due date falls on a holiday, the next working day will be considered the deadline.
The IRS requires you to e-file if you have to file 10 or more information returns of any type for the year, including 1099-MISC.
With bulk upload via CSV/Excel, you can pull data from the spreadsheet and auto-populate 1099-MISC Box 1 data. You can even integrate with your existing accounting software (QuickBooks Online, Sage, Xero, Tipalti, etc.), and pull payee and payment data directly.
Tax1099 also supports manual data entry with guided form fields if you're dealing with a smaller volume or one-off payees 1099 MISC for rental property owners.
The information in a W-9 is an important part of an accurate 1099-MISC filing. In order to gather the correct data, Tax1099 allows you to automatically request W-9s by using templated email requests or secure recipient portal links.
Recipients can submit their W-9s digitally, and once collected; you can bulk upload them and auto-populate their information.
Before you file, Tax1099 helps you run multiple layers of validation to ensure your forms are error-free. These checks include IRS TIN and name matching, USPS address verification, and automatic missing or invalid field detection. If any issue or error is detected, it will be flagged for correction.
After entering and validating the data, you will receive a comprehensive preview page showing Box 1 totals and all payer and recipient details. This gives you a final opportunity to review the form for accuracy. Once reviewed, click "Submit for Filing," and your form will be securely sent to the IRS.
If your landlord (recipient) has opted for a digital recipient's copy, you must deliver them before the due date. Tax1099 offers IRS-compliant e-delivery via secured portal with dashboard tracking to check if the form is accepted or rejected. There's also a print-and-mail option for those who prefer paper filing.
Time to Report All Your Rental Payments on 1099-MISC Box 1
If your business rents or leases a commercial building or space from an individual landlord, you must report the total rent paid in a tax year along with the utilities (if paid directly to the landlord) as part of your 1099 MISC Rental Income reporting.
Rent: $1,200/month × 12 = $14,400
Utilities: $200/month × 12 = $2,400
Box 1 Total: $14,400 + $2,400 = $16,800
If you rent out multiple warehouses through an LLC from a single landlord (even if they are on different contracts), you must report the combined total rent of all the properties. This particular setup is common for businesses managing 1099 MISC for rental property owners across multiple leases.
Number of properties: 2
Rent: $800/month per property
Total Rent: $800 × 2 = $1,600/month
Annual Rent Paid: $1,600 × 12 = $19,200
Box 1 Total: $19,200
In the event of in-kind payments or non-cash compensation, you will have to provide the Fair Market Value (FMV) of the service offered. For example, if you renovated the property, you could substitute the monetary rent with the FMV of the renovation work when reporting 1099-MISC rental income.
Rent: $2,000
Value of Renovation Work (Fair Market Value): $5,000
Box 1 Total: $7,000
For the 2024 tax year, third-party payment processors issued Form 1099-K for gross payments for goods or services that exceeded $5,000. In the 2025 tax year, the IRS plans to lower this threshold to $600.
If you are making direct rental payments to the landlord totaling $600 or more, then you must file Form 1099-MISC Box 1, regardless of how processors might handle other payments.
No. You must file Form 1099-MISC Box 1 only when the total rent you pay directly (cash, check, ACH, wire, or other non-card methods) to a non-corporate landlord is equal to or more than $600 in a calendar year. It does not include any amount paid with a credit/debit card or through a third-party processor (gets reported on Form 1099-K, based upon the respective threshold of that particular TY).
If you’ve paid rent worth more than the current IRS threshold to the landlord using a third-party payment processor like PayPal or Stripe, the landlord will receive a 1099-K from the payment processor. However, if you make direct rent payments to the landlord (not through a third-party payment processor) and those payments total $600 or more in the tax year, your business must issue 1099-MISC Box 1.
Recipient copies of Form 1099-MISC Box 1 must be delivered by Jan 31 (e.g., Jan 31, 2025 for 2024 payments). If copies are furnished after the due date, a $60 penalty will be imposed. For 31 days until Aug 1, the penalty is $13 per form. After August 1, if the form is still not delivered to the recipient, a penalty of $330 will be imposed. The penalty for international disregard is $660 per form.
If you are renting multiple commercial properties from one single landlord, you must aggregate all the rent paid to that landlord’s TIN in one Box 1 value on a single 1099-MISC form.
Box 1 on Form 1099-MISC reports rental payments of $600 or more for office or commercial space, machinery rentals, etc., made during the year.
Box 7 on Form 1099-MISC was used to report non-employee compensation (payments to independent contractors including services performed by the landlord). But from 2020, this reporting has moved to Form 1099-NEC, Box 1.
Streamline your rental income reporting with Tax1099's automated e-filing platform. Save time, avoid penalties, and ensure compliance.