It happens every year. Like clockwork – April 15th arrives. And your income taxes are due.
Taxes = Complicated
The worst part about taxes, after handing over all your hard earned cash, is the complication. Every year taxes get more and more complicated.
This is especially true for shopping center landlords. The enforcement of rules a regulation governing the investment income earned from your property’s seems to ratchet up a few notches each year.
Feeding the Beast
The reason for the increasing micromanagement? From fed to the state and right down to your local municipality – the government is broke. And the taxman is looking to ring every last dollar out of you (and everyone else) he can manage.
So the question is: How well organized are your taxes?
If you hesitated answering, it may be time to take a closer look at how you’re managing your property’s finances.
Here are four important tax rules and regulation to keep in mind when managing your property’s income taxes.
Vendor W-9 Forms
If you want to deduct your vendor payments from your income taxes, you must obtain a current, signed 1099 Form from those vendors.
The IRS and other tax collection agencies are clamping down on 1099 deductions. They will demand backup proving the vendor in question is a legitimate business entity.
Landlord W-9 Forms
When the IRS compares your Tax ID# with your ownership entity name, they expect it to match exactly. If it doesn’t the IRS will follow up and it may open the door to further unwanted investigation.
As such it’s imperative when filing your shopping center W-9 Forms to ensure your Tax ID# matches exactly with the ownership entity name for which that Tax ID# was issued
Tenant Issued 1099 Forms
If a tenant issues you a 1099 Form, it’s important to have your accountant review the form and confirm the information is correct. If there are any mistakes or inaccuracies, you need inform the tenant and request they issue a revised form.
An incorrect W-9 Form could have a significant impact your tax filing.
Issuing W-9 Forms to Tenants
If you issue a W-9 form to a tenant, be sure your ownership entity name matches exactly with the Tax ID# for said ownership entity.
The IRS isn’t just seeking W-9 Forms for the vendor expenses you’re claiming. They’re following up with your tenants on their backup, too. An incorrectly prepared W-9 Forms creates a paper trail that will lead the IRS right to your door.
How Property Management Can Help Manage You Shopping Center’s Income Taxes
The four tips outlined above all relate in some fashion to confirming W-9 Forms associated with your property are correct.
Your property manager will follow up with you regarding all of this documentation, both reminding you of the requirements and prompting you to confirm the information is correct.
This significantly lowers the likelihood you will forget required documentation or make errors that may come back to haunt you.
Need Help Managing Your Property’s Finances?
Click here to check out CBM’s services page and find out how professional property management can not only ease your burden, but save you time and money!