Tax question - 1099 rental income

General Real Estate Investing
1

Here is my situation, and my question…

  • I rarely get 1099s - but I have found out when you get section 8 rent you get a 1099-MISC from the city I am dealing with. This particular property will be associated with my social security number (not a EIN associated with one of my companies), for reporting purposes.
  • Real estate “rental” income is not subject to self employment taxes (fica, medicare) - I understand that
  • Assume I get $15,000 in gross income from the entity (a city) issuing me section 8 income, and they give the IRS and myself copies of the 1099-MISC
  • In the end this particular property will not make a lot of profit like most of my other rentals do - so lets say after all writeoffs related to the property I have $2000 in net profit, or taxable income

Question #1 - Does the IRS automatically assume all 1099 income is subject to self employment taxes? I would assume not, as that would be dumb on their part. But again I don’t get 1099s very often - so I don’t know.

Question #2 - How exactly would I associate that 1099 income to my schedule E, and properly document it / report it? I don’t want the IRS to think I am not reporting a 1099, and I don’t want to be subject to any unfair S/E taxes!!

Thanks,
MotivatedCEO

2

I get a 1099 MISC for all my rental properties, and my tax software asks me to link each 1099 MISC with the Schedule E property it applies to.

For Section 8, I only get one “grand total” 1099 MISC and then I have to allocate the 1099 MISC income among the properties I have participating in Section 8.

I have never had the IRS challenge me for not computing SE tax on the rental income reported on 1099 MISC.

For those that will want to ask, I use TurboTax Home and Business.

3

Thanks for the feedback.

I called the IRS this morning - and the (amazingly very nice) lady I spoke to informed me that 1099s have different sections/boxes on them specifying what type of income was given out. So the box specifying “rent” or “rental” income, when put into the tax software, will automatically make it know not to calculate S/E taxes.