This one is genuinely tricky, because independent contractors don't have a timesheet. If you are a 1099 contractor trying to qualify for Real Estate Professional Status, you run into a documentation problem that a W-2 employee never has to think about. The fix is straightforward once you understand the specific REPS rule you are up against, and it comes down to proving your hours in two directions at once.
The rule that makes 1099 hours matter
REPS is not just the 750-hour test. There is a second requirement people forget: more than half of all the personal services you perform in every trade or business during the year has to be in real estate. Not just 750 hours in real estate, but more real estate hours than everything else combined.
For a 1099 contractor, that is the whole challenge. If your contracting work is a trade or business, its hours go on the "everything else" side of the scale. So if you log 751 hours as an independent contractor, you need at least 752 hours in real estate to keep real estate on top. You have to document both sides, which means you need proof of your contractor hours just as much as your real estate hours.
Fix number one: put hours on your invoices
The simplest move is to invoice by the hour. When you invoice a client, show an hourly rate and the hours worked right on the invoice. Every time you bill, whether weekly, monthly, or quarterly, that invoice becomes a dated record of exactly how many hours you spent in your contractor role. If you send an invoice for 40 hours, you have created contemporaneous proof of 40 contractor hours.
Now you can show the IRS precisely how much time you spent as an independent contractor, which is exactly what you need to prove your real estate hours came out ahead. Even if you normally bill a flat fee, restructuring your invoices to show hours turns a billing document into a documentation asset.
Fix number two: let software track your screen time
If your contracting work happens on a computer, there is AI-based time tracking that logs your time automatically while you work. I use this kind of tool myself. It shows how many hours you spent in your contractor role versus your real estate role, so you can see which side of the "more than half" test you are on in real time rather than guessing at year-end.
Between the two, the invoice method proves your contractor hours cheaply and the automated tracker keeps a running tally, so you know before December whether real estate is actually winning.
The takeaway for contractors
To summarize: track your contractor hours by putting your hourly rate and hours on every invoice, and consider automated time tracking if your work is on a computer. Then track your real estate hours the same way, deliberately, so you can prove real estate exceeded contracting. The 1099 investor is not blocked from REPS. They just have to document both jobs instead of one.
This is educational, not tax advice, and the more-than-half test is where contractor fact patterns get genuinely close, so confirm the details with your CPA. REPS Time handles the real estate side of the ledger with a timestamped log; pair it with your invoices and you can show both totals side by side.
