1099s and year-end books for property managers

By Diane Jones, Certified QuickBooks ProAdvisor, 30+ years of bookkeeping
Updated October 2026

If you manage rentals for other people, January brings two sets of 1099s: one to each owner for the rent you paid over, and one to each vendor you paid on an owner’s behalf. Both come out of your trust books, so they’re only as right as those books are. Here’s how it works for 2026, and what I’d have done before December 31.

The two 1099s a property manager sends

A 1099-MISC to each owner

The IRS puts this one on you, not the tenant. Its instructions for Form 1099-MISC say tenants don’t report rent paid to a property manager, but "the real estate agent or property manager must use Form 1099-MISC to report the rent paid over to the property owner." The regulation behind it is Treas. Reg. section 1.6041-3(d).

The amount is generally the gross rent. The regulation says to report what’s includible in the owner’s income, "which in many cases will be the gross amount" before "fees, commissions, expenses" are taken out. Your management fee and the repairs you paid show up on the owner statement, and the owner deducts them on their return. Ask your CPA to confirm how that applies to your agreements before you file.

A 1099-NEC to the vendors you pay

When you pay the plumber or the roofer out of an owner’s funds while you’re managing the property, you’re the one who reports it. The IRS’s own example in Treas. Reg. section 1.6041-1(e)(5) says a rental agent paying repairmen "is performing management or oversight functions and is subject to the information reporting requirements." So the vendor gets one 1099-NEC from you, covering everything you paid them across all your owners.

Who doesn’t get one

• Anyone under $2,000. For payments made in 2026, rents and contractor payments are reported at $2,000 or more. It was $600. My 1099 guide for 2026 covers the change.
• Most corporations. Owners or vendors that are corporations, including LLCs taxed as one, generally don’t get a 1099, and rent isn’t one of the exceptions. Attorneys do get one.
• Vendors you paid by card. Card and payment-app payments are reported by the card company on a 1099-K, so they stay off your 1099-NEC.

The dates, and what late costs

Most management companies cross the e-file line without trying. If you file 10 or more information returns in total, W-2s included, you have to e-file, and starting this season the IRS takes them only through IRIS, its free filing system.

Late 1099s are charged per form. For returns due in 2027, the IRS penalty is $60 a form if you fix it within 30 days, $130 if you fix it by August 1, and $340 after that, under Revenue Procedure 2025-32. A separate penalty applies to the copy the owner or vendor should’ve received. With forty owners and a dozen vendors, that adds up fast.

Before you run the 1099s

Every number on those forms comes out of the trust books, so four things come first:

1. Reconcile the trust account three ways. The bank statement, the book balance, and the total of the owner liability accounts should agree to the penny, every month of the year. If they don’t, the owners’ 1099s won’t either.
2. Get a W-9 from every owner and vendor. It gives you the name and taxpayer ID the 1099 needs, and it tells you whether an LLC is taxed as a corporation. If a vendor hasn’t given you a taxpayer ID, their pay is subject to backup withholding at 24%.
3. Pull vendor totals across all owners. One plumber paid $800 on three properties is $2,400 and gets a 1099-NEC. Check how each was paid and whether they’re a corporation.
4. Close December before you run anything. Late December rent, January rent paid early, and checks that haven’t cleared all change the year-end totals.

The rest of year-end, from deposits held to owner statements, is in my year-end checklist for property managers. Your own company’s books are a separate job: management fees, your payroll, and your overhead live in the corporate books, never in the trust account.

I’m a bookkeeper, not a tax preparer or attorney. For tax and legal questions, confirm the details with your CPA. I keep the books that make their job easier.