1099-MISC and rental income question

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First off, I would like to thank all the "Tax gurus" for contributing to this forum. I've been reading a lot on taxes in the Income Tax 2009 forum and have a question of my own.

My qestion is if I received a 1099-MISC form that states that I received x-amount of rental income (let's just say it's $10,000 for the whole year), and it doesn't match what I received as I keep a semi-detailed log of what I received and it's total is $9,500, should I report 9500 as rental income or follow the 1099-MISC?


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Try to get the 1099 replaced with one that matches your records.

Follow your records. It's common for 1099's not to match your reported income because they are calculated on a cash basis, but many people account for income on an accrual basis.

dawndelion said: Follow your records. It's common for 1099's not to match your reported income because they are calculated on a cash basis, but many people account for income on an accrual basis.If he files in conflict with the 1099 amount, that may generate an IRS letter, especially if he reports on a cash basis.

Thanks dawndelion and xnarg, for your responses. Xnarg, as always, you always seem answer most user's questions quickly and I really appreciate it.

I do have another question. My property management company held $600 of the rental income in a trust account so that they can use it to pay for repairs, etc. Since that was listed as rental income, is it wise to enter $600 as an expense in TaxAct and name it "Trust Account" expense?

Thanks again.

AFAIK, contributions to a trust account do not constitute an expense. The expense occurs when the money is actually disbursed, in this case for repairs.

If no repairs are made, then you get the money back - and you'd have to declare it as income at that time.

Think of it like an impound account on a home mortgage. You don't get to deduct the amount put into the impound, only that which is actually paid for property tax and then after payment has been made to the taxing authority.

Anyone have a different perspective on this?

I agree with Xnarg. The money in trust isn't deductible until there are actual expenses that those funds paid for.

Also, would the reason the 1099 be different from the amount of cash rec'd have something to do with this trust account, or the management fees? The 1099 should show the gross rents rec'd, it's up to you to deduct the management fees and other expenses that might have been deducted off the top before you rec'd the cash.

As stated above, see if you can get a corrected 1099. If not , the difference it small and I always make sure the amounts I enter MATCH any 1099s I receive.

Even if the 1099s might be slightly off, I believe you are inviting extra scrutiny if you report a different #.

Thanks everyone for your replies! It's much clearer to me now. I will just report it based on the 1099 and not enter the trust account as an expense.

Shadow - yes, you are correct, the difference is actually because of the trust account.

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