1099-K requirements for our rental property income - will this change our tax liability?

We've been renting out the lower unit of our duplex for about 5 years now and have always reported the rental income on our taxes through TurboTax. Nothing complicated, just entering the income and expenses as required. Recently, the online payment platform we use to collect rent notified us they'll be issuing us a 1099-K for next year's rental payments. This has us slightly worried - we've always been honest about declaring all our rental income, but we've never received a 1099-K for it before. Does anyone know if this will change how much tax we end up paying? Will the IRS treat this income differently now that it's being reported via 1099-K? Or will it be business as usual since we've already been claiming 100% of the rental income on Schedule E? Just trying to prepare ourselves for any potential surprises when we file next year. Thanks in advance for any insights!

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18 comments

Hannah Flores

•8M

The good news is that since you've already been properly reporting your rental income all along, the 1099-K shouldn't change your tax liability at all. The 1099-K is just an information reporting form that payment processors are now required to issue when transactions exceed certain thresholds. You'll continue reporting your rental income and expenses on Schedule E just like before. The only difference is that the IRS will now have third-party verification of the income you receive through that payment platform. This is part of a broader IRS initiative to improve compliance in reporting various types of income. Make sure you keep good records of all your rental income and expenses as usual. If the 1099-K amount happens to differ from what you actually received (due to timing issues, refunds, or fees deducted by the platform), you'll need to be able to explain any discrepancies.

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Hannah Flores

•8M

Security deposits generally aren't taxable when you initially receive them, as long as you intend to return them to the tenant. They only become income if you keep part or all of the deposit due to damage or other lease violations. In that case, you'd include just the portion you kept as income. Late fees are considered additional rental income and should be reported along with your regular rent payments on Schedule E. The 1099-K won't differentiate between types of payments - it just reports the gross amount processed through the platform. You'll need to keep your own records of what portions were rent, late fees, or refundable deposits.

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William Rivera

•8M

Went through exactly this situation last year with my rental properties. I was using Venmo for all my rent collection and suddenly got a notification about 1099-Ks. I was super confused and worried, so I checked out https://taxr.ai to review all the payment records and categorize everything properly. It saved me SO much stress trying to figure out what counts as what. The platform really helped organize all my rental income data and figure out the differences between the 1099-K amounts and what should actually be reported as taxable income. They analyze your payment history and help identify which transactions are security deposits vs actual rent vs fees.

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William Rivera

•8M

It can pull data directly from most major payment platforms, so you don't have to do manual entry for those. You just connect your accounts securely and it imports everything. For platforms it doesn't integrate with yet, you can upload statements and it will extract the data. For expense deductions, yes absolutely! That's actually one of the most helpful features. It helps identify all potential Schedule E deductions related to your rental activity and organizes them by category according to IRS guidelines. It really clarifies what can be legitimately deducted against your rental income, which is super helpful for maximizing tax savings while staying compliant.

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Mia Roberts

•8M

Just wanted to follow up - I finally tried taxr.ai after our conversation and I'm actually amazed at how helpful it was! After connecting my payment accounts, it automatically sorted all my Airbnb income transactions and flagged the security deposits vs. actual rental income. The expense categorization tool saved me hours of work sorting through credit card statements. It even caught several deductions I would have missed (like a portion of streaming services that we provide to guests). The documentation they provided made me feel so much more confident about handling the 1099-K situation. Definitely recommend it to anyone dealing with rental income reporting!

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The Boss

•8M

If you get a notice from the IRS questioning any discrepancies between your reported rental income and the 1099-K amounts, don't panic! I spent WEEKS last year trying to get through to someone at the IRS to explain the difference between my gross receipts on 1099-K and my actual rental income after platform fees. Finally found https://claimyr.com which got me connected to an IRS agent in about 20 minutes instead of endless hold times. You can check out how it works here: https://youtu.be/_kiP6q8DX5c. I was skeptical but honestly, having a human IRS agent to talk to made resolving the issue so much easier than trying to handle it through letters and notices.

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The Boss

•8M

It works by holding your place in the IRS phone queue so you don't have to stay on hold yourself. They use technology to navigate the phone tree and wait on hold, then call you when they've reached an actual IRS agent. It literally saved me hours of hold time. It's definitely not a scam. They don't ask for any personal tax info or anything like that. They just deal with the hold time for you. I was able to talk directly to an IRS agent who helped me explain the difference between my 1099-K amount and my Schedule E reporting, which saved me from a potential audit situation.

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Victoria Charity

•8M

I have to eat my words and apologize to Profile 16. After getting a CP2000 notice about unreported income (related to my rental property 1099-K), I was desperate enough to try Claimyr. I was 100% convinced it wouldn't work, but within about 25 minutes I was talking to an actual IRS representative who helped clear up the confusion. The agent confirmed that I needed to provide a reconciliation showing the difference between the 1099-K gross amount and my actual rental income after fees. I submitted the documentation they requested and my case was resolved within 3 weeks. Would have spent countless hours on hold otherwise. Sorry for being so skeptical!

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Jasmine Quinn

•8M

Something to watch out for: the 1099-K will show the GROSS amount processed, including any fees the platform charges you. So if your annual rent is $12,000 but the platform takes a 3% fee, your 1099-K might show $12,000 while you actually only received $11,640. You're still entitled to deduct those platform fees as a business expense on your Schedule E. Just make sure your records clearly show the difference between the gross amount on the 1099-K and the net amount you actually received.

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Jasmine Quinn

•8M

Yes, definitely keep documentation! Save monthly statements from your payment platform that show both the gross rent collected and the fees deducted. Many platforms provide year-end summaries that break down these amounts clearly. I also recommend creating a simple spreadsheet tracking each payment, the fee charged, and the net amount received. Having this detailed record will make tax preparation much easier and provide solid documentation if the IRS ever questions the discrepancy between your 1099-K amount and what you reported on Schedule E.

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