IRS generating a 1099 for rentals

[cbyrne1174]

I’m trying to figure out whether or not I should give some deeds back to Wyndham. I usually use less points than I own and rent out the rest. The amount I make renting is less than my annual maintenance fees. My tax bracket is 22%. When I do a rental, it’s usually only about 10% more than what it costs me per point + listing fee. If I were taxed 22%, I’d be at a loss.

I just mainly wanted more housekeeping credits, so I would rent out a 224,000 point Bonnet Creek reservation that only used 1 housekeeping credit and have an extra 2 to work with for my remaining points.

Will the amount of money I make back doing the rental be taxed the entire amount or just the amount that exceeds my annual maintenance fee? (Does annual maintenance count as a deduction) My annual fees are around $4500 and my rental income is about $1500.

 

[dioxide45]

You should be writing off maintenance fee and other rental costs associated with the reservations you rent. So you should never end up at a loss because of taxes. You should only pay the taxes on the "profit". Also, since this would be schedule C income, you pay more than just the regular income tax. But again, you only pay it on the profit.

 

[Eric B]

Taxes can be a complicated issue with a system like Wyndham where there are different points with different costs and other items like housekeeping and reservations that can have additional costs. It's also not entirely clear how to write off the initial cost of the ownership because it's not well addressed in the tax regulations. If you made a reservation in ARP and rented it out it would be pretty clear what points you used and what their cost was, in SRP or ERP you have the choice of what points were used unless you used ARP elsewhere. In any case, the IRS won't generate a 1099 for your rental income - 1099s might be generated by brokers or some other fund transfer companies. My taxes are always a mess because I run a farm and own rental houses as well as have a full time job, so the marginal nuisance of accounting for any timeshare usage I rent out isn't too bad. Kind of makes me hate Aprils, though.

 

[cbyrne1174]

Taxes can be a complicated issue with a system like Wyndham where there are different points with different costs and other items like housekeeping and reservations that can have additional costs. It's also not entirely clear how to write off the initial cost of the ownership because it's not well addressed in the tax regulations. If you made a reservation in ARP and rented it out it would be pretty clear what points you used and what their cost was, in SRP or ERP you have the choice of what points were used unless you used ARP elsewhere. In any case, the IRS won't generate a 1099 for your rental income - 1099s might be generated by brokers or some other fund transfer companies. My taxes are always a mess because I run a farm and own rental houses as well as have a full time job, so the marginal nuisance of accounting for any timeshare usage I rent out isn't too bad. Kind of makes me hate Aprils, though.

Thanks! I was worried that Redweek would generate one because of the $600 rule that passed congress last year. I just wanted to make sure I could use my maintenance fees as a deduction, so the profit would be 0.

 

[cbyrne1174]

You should be writing off maintenance fee and other rental costs associated with the reservations you rent. So you should never end up at a loss because of taxes. You should only pay the taxes on the "profit". Also, since this would be schedule C income, you pay more than just the regular income tax. But again, you only pay it on the profit.

Thanks! I was also thinking of renting out my Grande Vista week to cover my maintenance fees when I dont need it. Part of me getting the EOY legacy week was so that I could get an II account for cash getaways.

 

[dioxide45]

Thanks! I was worried that Redweek would generate one because of the $600 rule that passed congress last year. I just wanted to make sure I could use my maintenance fees as a deduction, so the profit would be 0.

Redweek or whoever is the payment processor should be issuing a 1099 and you should be able to write off underlying costs on a schedule C.

 

[capital city]

2 things, not sure on them but I would look into
1. You write off only the mf that you used for the rental. Ex. You own 800,000 but used only 200,000 for that Bonnet Creek rental, you can write off the 200,000 not the 800,000
Dioxide seems to be implying 200, but seems your assuming 800 (could be wrong)
2. It may go on a schedule C but I think rental income is different then the typical self employed rate

 

[VacationForever]

Thanks! I was worried that Redweek would generate one because of the $600 rule that passed congress last year. I just wanted to make sure I could use my maintenance fees as a deduction, so the profit would be 0.

The bill was not passed and it was amended to $10K. It was going to be part of the BBB spending bill which is now essentially dead.

 

[Cyrus24]

The bill was not passed and it was amended to $10K. It was going to be part of the BBB spending bill which is now essentially dead.

It was the American Rescue Act, signed into law Spring 2021, that set up the $600 threshold on 3rd party apps. Not sure how Redweek fits into the process. I plan on only accepting checks for the few rentals I do, starting today, just to avoid having to deal with proving a loss on any 1099-K's.

'Under the American Rescue Plan Act, people who sell goods or services on platforms like Etsy, eBay and other sites that use third-party transaction networks – like PayPal, Cash App and Venmo – will be issued a tax form called a 1099-K for online sales totaling $600 or more starting next year.'

 

[dioxide45]

The bill was not passed and it was amended to $10K. It was going to be part of the BBB spending bill which is now essentially dead.

Two different bills. The one you are thinking of was new reporting requirements for banks accounts that had over a $600 balance. This new 1099 reporting requirement did pass both houses and was signed into law.

 

[VacationForever]

Two different bills. The one you are thinking of was new reporting requirements for banks accounts that had over a $600 balance. This new 1099 reporting requirement did pass both houses and was signed into law.

Argh... I did a quick google and thought it didn't make it. Thanks for correcting me.

 

[steve_solo]

I sell a few tickets a year on Stubhub site. Their website today asked for my taxpayer ID number (SSN). Stubhub said they will generate a 1099 when I reach $600 a year in gross payments, even though they grab a few percent off the top before I get paid back. This new law is going to generate a ton of new IRS paperwork and book keeping for the rest of us.

 

[Cyrus24]

I sell a few tickets a year on Stubhub site. Their website today asked for my taxpayer ID number (SSN). Stubhub said they will generate a 1099 when I reach $600 a year in gross payments, even though they grab a few percent off the top before I get paid back. This new law is going to generate a ton of new IRS paperwork and book keeping for the rest of us.

StubHub has hit me up 2 days in a row for this info. After the 2022 tax year, it could get ugly for some folks. IRS has just been given another reason to audit our tax returns. Account for the 1099K's correctly showing little to no profit, as will be my case, and they could STILL harass you over the 1099K's in an effort to up tax collections. I'm not happy about this. It will really hurt low income persons who have run 'off the books' side hustles just to make ends meet.

 

[VacationForever]

It will really hurt low income persons who have run 'off the books' side hustles just to make ends meet.

Really? I thought the law was put in to go after the rich?

 

[Cyrus24]

Really? I thought the law was put in to go after the rich?

That was the sales pitch given by those who wanted this in the bill. The IRS will use the bill to go after 'richer' people but, it's the less rich people who will feel the most effect at tax time. More reality, it will cost an extra $40 to buy the Turbo Tax upgrade that allows you to enter the 1099K's. I just tried to enter a 1099K via my 2021 TurboTax Deluxe program and was shocked to see that they want an extra $40 just to enter a 1099K.

 

[Eric B]

That was the sales pitch given by those who wanted this in the bill. The IRS will use the bill to go after 'richer' people but, it's the less rich people who will feel the most effect at tax time. More reality, it will cost an extra $40 to buy the Turbo Tax upgrade that allows you can enter the 1099K's. I just tried to enter a 1099K via my 2021 TurboTax Deluxe program and was shocked to see that they want an extra $40 just to enter a 1099K.

You could download the form from the IRS and fill it in and mail it instead.

 

[Cyrus24]

You could download the form from the IRS and fill it in and mail it instead.

If it was only 1 form, I'm sure I could, but, that is just one of many forms that I file. I've used TurboTax for years and love that it takes what I enter, does all the calculations for me, sends it to the IRS, and sends to the 2 states I file in. If the schedule C just listed a loss on the 1099K's, I guess I could just add it to the stack of papers I'd be printing and manually mail it all in. This is getting far to complicated. I'll just donate the football and basketball season tickets I don't use, then manage the few rentals I do with cash.

 

[DeniseM]

Why don't you just use a CPA?

 

[dioxide45]

Why don't you just use a CPA?

That would cost even more...

 

[dioxide45]

That was the sales pitch given by those who wanted this in the bill. The IRS will use the bill to go after 'richer' people but, it's the less rich people who will feel the most effect at tax time. More reality, it will cost an extra $40 to buy the Turbo Tax upgrade that allows you to enter the 1099K's. I just tried to enter a 1099K via my 2021 TurboTax Deluxe program and was shocked to see that they want an extra $40 just to enter a 1099K.

I think the 1099 triggers the suggested upgrade to TurboTax Home & Business. It is just an upsell. As far as I know the standard Deluxe product supports a Schedule C and 1099s.

 

[cbyrne1174]

You could download the form from the IRS and fill it in and mail it instead.

So you would just fill out this form: https://www.irs.gov/pub/irs-pdf/f1040sc.pdf
And this one will be generated by Paypal/Redweek/VRBO/Ebay? https://www.irs.gov/pub/irs-pdf/f1099k.pdf

 

[Cyrus24]

I think the 1099 triggers the suggested upgrade to TurboTax Home & Business. It is just an upsell. As far as I know the standard Deluxe product supports a Schedule C and 1099s.

Why don't you just use a CPA?

It triggers an upsell, but I could find no other way to enter the data. Try it, if you find the path, share it.

And I’m not paying a CPA just to report a loss on a form I’d not otherwise need.

 

[DeniseM]

But you want to give away football and baseball tickets instead? I don't know your financial situation, but we use a CPA every year, and he saves us far more than it costs us.

 

[Cyrus24]

So you would just fill out this form: https://www.irs.gov/pub/irs-pdf/f1040sc.pdf
And this one will be generated by Paypal/Redweek/VRBO/Ebay? https://www.irs.gov/pub/irs-pdf/f1099k.pdf

Pay the extra 40 to TurboTax or hire a CPA. Looks like more than one form will be involved.

 

[dioxide45]

It triggers an upsell, but I could find no other way to enter the data. Try it, if you find the path, share it.

And I’m not paying a CPA just to report a loss on a form I’d not otherwise need.

I haven't used Deluxe for a few years because of an LLC, but a Google search indicated that Schedule C and 1099K was supported in Deluxe. I found this about it. It doesn't seem that there is a specific area for the 1099K, but it can be entered as income on the schedule C. It does seem that the 1099K is specifically supported in Home & Business, but not really required.

Re: How do I add 1099k

You can enter the income reported on your Form 1099-K as self-employment income on Schedule C. Please follow these steps in TurboTax: Open or continue your return. Search for Sch C and select the Jump to link in the search results. Next: If you’re entering info about your business for the...

ttlc.intuit.com