All Forum Posts by: Scot C.

I use a property manager for an out of state rental property.  Last year we kept most of a security deposit for repairs after the tenant moved out.  We also received some payments from the new tenants for utilities payments that I made for a few months because the tenants were slow to switch the utilities to their name.  These things came to almost $3,000.  My property manager added this amount to my 1099-MISC under Box 3 - other income.  I contend that this should have been included in Box 1 - rents.

Box 3 amounts are not allowed to be included in my Schedule E, so they are kicked out to a Schedule C, which will raise my tax liability unless I move the associated expenses (which of course were for a rental property) over to Schedule C.  I think doing this would be wrong and would not accurately reflect the reality of the proper accounting.

Can anyone tell me the proper place for these items to be reported on the 1099-MISC?  Am I correct?

Thank you!