The 1099 You Owe Your Contractors: Filing Rules for Kansas City Rental Owners
Rental property owners must send Form 1099-NEC to any unincorporated contractor paid 600 dollars or more in a calendar year, due January 31 to both the contractor and the IRS. Starting with payments made in 2026, that threshold rises to 2,000 dollars. A property manager typically files for vendors paid through its trust account, but an owner who pays a handyman directly, outside that system, still owes the filing.
Every January, a few of our out of state owners get the same unpleasant surprise. They saved a little money in the fall by paying a handyman directly instead of routing the work through Alpine, and now their CPA is asking for a 1099-NEC they never filed. The handyman fixed a furnace in Raytown in October, got paid $850 by personal check from an owner in Seattle, and neither party thought about paperwork again until tax season.
The 1099-NEC rule is not complicated once you know who counts as the payor. The complication is that a rental property can have two different payors in the same year: the property manager, who files for vendors paid out of the trust account, and the owner, who becomes the payor of record the moment they cut a check or send a Zelle payment themselves. The rule that applies, and the threshold that triggers it, depends entirely on whose bank account the money left.
This post walks through who gets a 1099-NEC, the dollar threshold that is about to change for the first time since 2011, what Alpine files on an owner's behalf versus what stays the owner's own obligation, and the January deadline that has no grace period.
What is a Form 1099-NEC and why does it apply to a rental property?
Form 1099-NEC reports nonemployee compensation, meaning money paid to an independent contractor rather than a W-2 employee. The IRS's Schedule E instructions, the same form every rental property owner files with their 1040, ask directly whether the filer made any payments during the year that would require a 1099, and instruct that in general a payment of at least $600 for services from a non employee triggers the requirement.
That question sits right on the Schedule E form for a reason. The IRS uses an automated underreporter program that cross checks the repair and maintenance expenses a landlord deducts against the 1099-NEC forms filed for those same payments. Claim a $3,200 roof repair as a deduction with no matching 1099 on file for the roofer, and the mismatch is exactly the kind of discrepancy that generates a notice.
Who counts as a contractor that needs a 1099, and who does not?
The test is simple: anyone who performed a service for your rental, was not your employee, and was not operating as a corporation. That covers most of the people a Kansas City landlord actually pays.
- Handymen, general repair contractors, and occasional maintenance help
- Landscapers and lawn crews paid directly by the owner
- HVAC technicians, plumbers, and electricians who are sole proprietors or partnerships
- Cleaning crews hired for turnover between tenants
- Attorneys, regardless of how they are structured, since legal fees are the one service payment that always requires a 1099
Payments to a business organized as a C corporation or S corporation are generally exempt, with that attorney exception. A landscaping company that is genuinely incorporated does not need a 1099 from you even at $5,000 paid. The only way to know which category a vendor falls into is the form covered in a later section.
What is the current 1099-NEC threshold, and is it really changing?
Yes, and this is the piece that catches even attentive owners. For payments made in 2025, the threshold is the long standing $600 that has applied since Form 1099-NEC was reintroduced. If you paid a contractor $600 or more across the year, a 1099-NEC was owed by January 31, 2026.
The threshold is rising for the first time in over a decade because of the One, Big, Beautiful Bill Act, signed into law in July 2025. For payments made starting in calendar year 2026, the reporting threshold jumps to $2,000, and beginning in 2027 that figure will be adjusted annually for inflation. The IRS has already published general instructions for information returns reflecting the change. Practically, that means a handyman paid $1,400 across three small jobs in 2025 required a 1099. The same $1,400 paid across 2026 will not, but a $2,100 total will.
Does the threshold change mean I can stop tracking small contractor payments?
No, and this is where owners get into trouble. The $2,000 figure is an aggregate per contractor per calendar year, not a per invoice limit. If you pay the same handyman $900 in March for a garbage disposal and $1,300 in September for a fence repair on the same Independence property, that is $2,200 total to one payee, which crosses the 2026 threshold even though neither invoice alone did.
The tracking burden does not disappear, it just resets at a higher number. An owner who pays vendors directly still needs a running total by contractor, not by job, and still needs that total available before the January filing window opens.
| Scenario | Who is the payor of record | Who files the 1099-NEC | What the owner must still do |
|---|---|---|---|
| Vendor paid through Alpine's trust account for a managed property | Alpine, as the entity that issued the payment | Alpine files under its own tax ID for that vendor's aggregate across the portfolio | Nothing, this is included in Alpine's management service |
| Owner pays a handyman directly, outside Alpine's system, for a managed property | The owner personally | The owner, using their own name or entity's tax ID | Collect a W-9 before paying, track the annual total, file by January 31 |
| Self managed property, all vendors paid by the owner | The owner personally | The owner, for every contractor that crosses the threshold | Collect W-9s at first payment, track totals across the whole year, file by January 31 |
| Alpine's management fee, tiered 10 percent down to 5 percent by rent level | The owner, paying Alpine | Generally not required if Alpine's entity type is exempt from 1099 reporting, confirm on Alpine's W-9 | Keep the W-9 on file, do not assume every service payment is exempt without checking |
What does Alpine file on an owner's behalf, and what stays the owner's obligation?
Alpine issues 1099-NEC forms for every contractor paid out of the trust accounts we operate for managed properties, aggregated across the portfolio for that vendor. A plumber who did $400 worth of work for one owner's Grandview duplex and $1,700 for another owner's Lee's Summit rental, both dispatched and paid through Alpine, gets one 1099-NEC from Alpine reflecting the combined total, because Alpine is the single payor.
What we cannot file for is money we never touched. If an owner negotiates directly with a vendor, whether to avoid our project management charge of up to 15 percent on a self sourced renovation or simply because they already had a relationship with that contractor, the owner becomes the sole payor for that specific transaction. Our owner statements, part of what is spelled out in our management services agreement, itemize every dollar that moves through us, which is useful documentation, but they cannot substitute for a 1099 on a payment that bypassed our system entirely. Our published fee schedule shows exactly which charges route through that trust account and which do not.
When is the 1099-NEC deadline, and what happens if an owner misses it?
January 31 is the deadline both to furnish the form to the contractor and to file it with the IRS, for paper and electronic filing alike. Unlike some other information returns, there is no automatic extension available for Form 1099-NEC. For an owner in California or Seattle managing a Kansas City property from a distance, that means the paperwork has to be assembled well before the standard mid April tax deadline is even on the radar.
Missing the deadline exposes an owner to per form penalties that scale with how late the filing is and whether the failure looks intentional. Beyond the direct penalty, a late or missing 1099-NEC on a payment claimed as a Schedule E deduction is precisely the mismatch the IRS underreporter matching described earlier is built to catch.
How does an owner actually prepare for this before December?
The mechanics are the same whether you self manage or occasionally pay a vendor directly around a managed property. Collect a completed Form W-9 from any contractor before the first payment goes out, not after. The W-9 tells you the vendor's legal name, tax classification, and taxpayer identification number, which is the only reliable way to confirm whether that landscaper is a sole proprietor who needs a 1099 or an incorporated company that does not.
- Get a signed W-9 before the first check or electronic payment, regardless of how small the first job is
- Keep a running total per contractor across the calendar year, not per invoice
- Flag any contractor approaching $600 for 2025 payments or $2,000 for 2026 payments
- Prepare and furnish Forms 1099-NEC by January 31, then file with the IRS by the same date
- Retain copies with the underlying invoices for at least three years
Does this apply differently if I self manage instead of using a property manager?
Self managing removes the middle layer entirely. Every contractor you pay, from the lawn crew that services a rental near Platte City to the electrician who fixes a breaker panel across town, makes you the payor of record with no exception. There is no trust account absorbing that filing obligation on your behalf, which means the W-9 collection and year end tracking described above falls entirely on you, on top of rent collection, maintenance coordination, and everything else a self managed rental already requires. Owners who own in Platte City or other outlying suburbs feel this most, since finding and vetting a reliable local vendor from out of state is already its own project before the tax paperwork even starts.
Owners who transition into our full service management after a year or two of self managing often tell us the tax paperwork was the part they underestimated most, not the maintenance calls.
About Alpine Property Management Kansas City
Founded in 2013 by Marcus and Cara Painter, Alpine Property Management manages residential properties across the Kansas City metro area. Our commitment to responsive communication, efficient maintenance coordination, quality tenant placement, and transparent financial reporting has built our reputation for excellence. We serve Kansas City MO, Kansas City KS, Overland Park, Leawood, Olathe, Lenexa, Shawnee, Lee's Summit, Independence, Blue Springs, Gladstone, Liberty, North Kansas City, Parkville, Riverside, and surrounding communities.
Contact: 816-343-4520 | info@alpinekansascity.com
Website: Alpine Property Management Kansas City
Marcus Painter, Founder and Owner, Alpine Property Management Kansas City