Understanding the 1099-K flow
( For Landlords) Have questions about Cozy's 1099-K process? Running into issues adding your tax entities? Read on for FAQs and troubleshooting tips.
What information do I need to enter?
We'll ask that you enter your name, address, and a Tax ID Number Type such as a Social Security Number.
We'll ask that you enter your name, address, and an Employer Identification Number.
I'm seeing an error message– what's happening?
It helps to keep in mind that these fields needs to match exactly how it is at the IRS.
When you enter the tax entity's EIN/SSN, the individual or business name for that number must exactly match what's on file with the IRS.
Here are some common reasons for getting this error:
- If there's an abbreviation or punctuation where it shouldn't be, that could trigger an issue.
- For example, if the IRS has your company on file as "Bluthe Real Estate, LLC" but you enter "Bluthe Real Estate LLC," that might trigger an error.
- If your mailing address doesn't match what the US Postal Service uses for your entity, then it may fail.
I'm a property manager for multiple clients with properties– can I enter multiple EINs and business names?
Each bank account you accept payments to within Cozy can have a dedicated and separate Tax ID number. If you're receiving rent to multiple bank accounts, you should be able to enter each relevant entity's information.
For any one bank account that received payments for more than one entity, the payments can not be separated at our level. Instead, you'd need to assign just one entity to that bank account. If it does qualify for a 1099-K, then the entity you linked will become a "nominee" for the other relevant entities.
From there, you (or the entity you used if not yourself) can then file their own 1099s to disburse (or break out) the amounts to the appropriate entities. We recommend talking to a tax professional about that when the time comes – it's not super difficult, just adds an extra step. This IRS link explains that process a bit: IRS 1099-K Resources
We manage for multiple clients but only one might meet the 1099-K requirements (collect over 200 payments and $20,000 in a calendar year). Why am I required to fill out this tax information for everyone?
This is something we can't bypass. While it is not a regulation or law change, it's a choice our accounting team made to further prevent mistakes before they happen, and completely ensure accuracy and such come tax season.
We're a property management company and the rents we receive are not income to us but to the owners of the properties. I feel uncomfortable asking and entering their Social Security numbers.
Entering the required information for every active bank account (regardless of if you expect it to qualify) is not something we can not bypass– sorry about this.
If you're able to get the information for each entity, they would not need to be re-verified in the future. The information is also not and will not ever be used or accessed for any other purpose, and is completely encrypted. If any given entity never qualifies, their information will never be accessed.
I still need to add a tax entity for one or more of my bank accounts. Will my payments go through this month?
Yes, this month's payments will most likely go through. We send you several email warnings about 1099-K issues before your payments stop processing. That said, we recommend you add your tax entity details ASAP to avoid any payment delays.