If an owner’s 1099 doesn’t match their end-of-year reports, the cause is almost always one of these: the reports were run differently, a chart of account is marked taxable when it shouldn’t be (or the other way around), or a suppressed fee mismatch is throwing off the year. Work through the steps below in order.
After each fix, recompile from Actions › Recompile on the Tax Reporting page with Update Amounts ONLY (or Update ALL Information if you changed contact info), then compare again.
Step 1: Make sure you’re comparing the same thing
Start by viewing the breakdown in the Modify Tax Record window (see How to View the Taxable Amount of a 1099). Then check that your report matches how the 1099 was built:
The Cash Flow Annual report is set to Cash and covers the same tax year.
Include Prepayments matches on the report and the compile.
The Ledger filter is the owner’s portfolio, and you’ve applied their ownership percentage.
You’ve accounted for tax adjustments on the contact. They don’t appear on the Cash Flow report.
Step 2: Check which chart of accounts are taxable
An account that’s taxable but shouldn’t be, or one that should be taxable but isn’t, is the most common cause of a mismatch.
Go to Settings › Chart of Accounts, filter Account Type to Income and Other Income, and click Update.
Compare each income line on the owner’s Cash Flow report to the account’s Taxable pill.
To change one, click the account, click Edit, toggle Is Taxable on or off, and click Save.
Recompile.
Changing an account affects every owner who uses it, so double-check before you save.
Step 3: Correct suppressed fee mismatches
A suppressed fee mismatch means fee income on a unit didn’t net out correctly, which can throw off the owner’s taxable income for the year. Go to Accounting › Diagnostics and review the suppressed fee section. It lists positive and negative mismatches by unit and chart of account.
If the portfolio or property is deactivated
Open the property, click Actions, and select Activate Property. The unit won’t show in a journal entry until you do.
Create a journal entry at the unit level (not the portfolio) using the same chart of account shown in Diagnostics.
For a positive mismatch, debit the account shown in Diagnostics and credit Owner Distribution.
For a negative mismatch, credit the account shown in Diagnostics and debit Management Fee Expense.
Check Diagnostics again to confirm it cleared, then recompile.
Full walkthrough: How to correct a suppressed fee mismatch for deactivated portfolios/properties. For an active unit, see Correcting a suppressed fee mismatch.
Step 4: Check the prepayment amount
Run a General Ledger for your prepaid account and confirm the net change matches the Prepayment Amount. See What Makes Up the Prepayment Amount on a 1099.
Step 5: Check tax adjustments and ownership
Confirm each tax adjustment’s date falls in the tax year and its sign (positive or negative) is right.
Confirm Percent Owned on the owner contact’s Portfolios card matches the Distribution Percentage on the portfolio.
See How a Taxable Amount or Tax Adjustment Affects a 1099 for details.
Step 6: Already filed? Submit a correction
Fix the source, recompile, then mark the 1099 as a correction and send the IRS a new file. See How to submit corrections for 1099s.
Frequently Asked Questions
I changed an account to taxable. Why didn’t the 1099 update?
Recompile with Update Amounts ONLY or Update ALL Information. Do NOT Change Existing 1099s only updates minimums.
Do I need to fix suppressed fee mismatches before filing?
Yes, if they’re in the tax year you’re reporting. Clear them, then recompile so the 1099 reflects the corrected income.
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