Taxes. Just the word will send a chill up the spine of most Americans. Not only is it a confusing world full of language that doesn't make sense to us common folk, but it also can get you in trouble with the law if you don't walk the chalk line.
This is doubly true when you're getting starting with renting out your San Antonio property and you have to screen potential renters. With all of the steps that are required when vetting renters, reading through their tax statements and 1099s could easily be seen as the most difficult task.
That said, it doesn't have to be as difficult as you might believe. In fact, learning to read tax statements can be a quick and easy way to verify the income of your potential tenant. Read on to find out more!
How Do I Read Tax Statements and 1099s?
Looking at tax statements, all you may see are a bunch of tiny boxes filled with what appear to be random numbers. However, each of these numbers corresponds to a certain detail about the applicant's earnings.
Here are just a few things you'll want to watch for when reading through a 1099:
Box 1
The first box is also the most obvious — and perhaps the most important. In this box, you'll see the gross income received by the individual. Since this is a 1099 and not a regular W2 (the one that most workers have), all of the info applies to a non-employee. This would usually be a freelancer or contractor, but the type of work shouldn't make a difference in how the form is read.
Box 4
The only thing that could be more important than the gross income is the net income. This is the actual amount the worker is left with after all taxes and payments have been issued.
One part of finding out the gross pay is knowing the federal income taxes that were withheld (or taken). You'll find this amount in box 4 of the 1099, and you can deduct the amount from the net pay in box 1.
Final Boxes
Depending on the 1099 you're reading, this information will be located in boxes 5-7 (1099-NEC) or in boxes 15-17 (1099 MISC). Unlike box 4, these boxes show specific information for state taxes.
Any numbers listed here would also be deducted from the annual gross amount so you can get a better idea of what the net amount would be.
Let’s Take Care of Your Property
Congrats, now you know how to read tax statements and 1099s! With that said, you can finally take applications from your first tenant. Before you get too far down the road, though, you'll need to make sure you hire someone who can manage your property. We're happy to help with that.
The Home River Group is dedicated to making sure our San Antonio client's properties are in good hands. We offer residential management and leasing services, and we do it in a manner that's beneficial for both the tenant and landlord.
Make sure to have a look around our site to learn more, or give us a call to set up an appointment with us. We can't wait to work with you!
