Received 1099-MISC for rental income, but don't own 100% of the property

Forum|Forum|1 year ago
April 6, 2025
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My parents, brother, and I own a rental property where we each have a 33.33% share. We received one 1099-MISC from our new tenant for 100% of the rent paid and it's reported under my dad's ssn.

In TurboTax, the 1099-MISC is being entered in my dad's filing, so the whole 100% amount is being allocated to him. I know we can overwrite the rent received to his 33.33% portion, but am worried that because the reported 1099-MISC amount doesn't match the rent received on his return, it'll trigger a red flag with IRS.

An accountant friend suggested that we add a supplemental statement for Schedule E stating the 1099-MISC is only 33.33% for my dad, and the other 33.33% is for my brother and I, along with our ssn in the statement. But my understanding is that there's no way to add a statement to the e-file?

Any better solutions available? Thank you!

Best answer by SusanY1

Including an explanation doesn't necessarily lower the odds of the IRS asking about the income. This is because the majority of IRS inquiries are computer generated and don't involve any human to actually look for things like explanation statements. The computers don't have a way to read statements that haven't been specifically asked for by the IRS.

If you have the explanation statement in your own records, it'll serve as a useful reference to supply to the IRS quickly in the event that they ask.

I recommend preparing the statements for each of you to keep with your own records, but not worrying about supplying it at the time you file your tax return.