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1099 contractors

9 posts by 4 users

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Bill W

Louisville, Kentucky

Dec 20 '10, 03:43 AM


Do I have to 1099 every contractor I use on a flip, or is my check receipt all I need.



Bill Gulley

Real Estate Investor from Springfield, Missouri

Dec 20 '10, 03:51 AM


You need to provide a 1099 for every employee/contractor you hire and pay more than (I think, 1,000 bucks to). If you hire a GC, he must 1099 his subs (and I might ask for comfirmation too, depending on who it was). You need to keep track through out the year as you need to provide a 1099 when you hit the that payment amout in that tax year.

I believe this is being revisited and the requirement may change to a higher amount or other modifications, but as it stands now, I would 1099 everyone that is required, it won't hurt, even if the requirement is changed.

Your 1099s will need to match your deductions taken. Good luck...



Mike Grayford

Rehabber from Simi Valley, California

Dec 20 '10, 04:03 AM


You don't have to give a 1099 to employees, there are different forms for reporting their income.

As for independent contractors, my understanding is that you only have to send them 1099 forms if they are sole propietorships (i.e. not corporations, LLCs, or Partnerships). You need to first give each contractor you work with a W-9 form to get their information (like address, EIN, and business entity type) and keep this W-9 on file for each contractor.

You only have to file the 1099 for contractors you pay more than $600 to in a calendar year. And I don't think you have to send that out until the end of the year (before January, actually).

But really you should consult an accountant.



Steve Babiak

Real Estate Investor from Audubon, Pennsylvania

Dec 20 '10, 04:04 AM
1 vote


1099 rules will be changing for 2011. For 2010, you are required to send a 1099-MISC to anybody to whom you made a total payment of $600 or above in the tax year, as long as that payment wasn't made to a corporation. So you send 1099s to LLC's, sole proprietors, partnerships - just not Inc's.

More info at this other thread:
http://www.biggerpockets.com/forums/52/topics/56123-landlord-s-will-need-to-prepare-1-99s


Edited Dec 20 2010, 04:14 by Steve Babiak


Steve Babiak, Redeeming Properties, LLC
Telephone: 6109082183
...


Steve Babiak

Real Estate Investor from Audubon, Pennsylvania

Dec 20 '10, 04:14 AM
3 votes


Some misinformation in posts above mine. I am not a CPA or accountant, so check with yours. (But some of them don't know this stuff either!)

$600 is the correct limit for 2010.

For tax year 2010, only corporations are not required to be sent a 1099 - those would have inc at the end of their name. And for 2011, even the Inc's that you deal with will have to be issued these 1099s. Other entities get 1099s for both 2010 and 2011 tax years.

The deadline to send a 1099 is always last day of January in the calendar year that follows end of the tax year being reported (if last day falls on weekend or holiday, then usually it will be a day in February for the deadline). So for tax year 2010, you will send the 1099 in January of 2011.

Getting the W9 filled in can be difficult if you already paid the contractor; just make a request for them to fill out the W9. If they don't, you still send the 1099 out, but it will be missing some info important to the IRS. IRS will send you a letter to not do that again in your first time doing that, and to send a letter to that contractor that you will be required to get their tax ID before doing any further business with them. They will either fill in the form then, or you will stop giving them business.

Also, keep in mind that the W9 form serves another purpose as well. It states the the person giving you the W9 is exempt from backup withholding; otherwise you are required to withhold 28% (if I'm not mistaken) to be sent to the IRS.



Steve Babiak, Redeeming Properties, LLC
Telephone: 6109082183
...


Bill Gulley

Real Estate Investor from Springfield, Missouri

Dec 20 '10, 04:14 AM


Originally posted by Steve Babiak:
1099 rules willbe changing for 2011. For 2010, you are required to send a 1099-MISC to anybody to whom you made a total payment of $600 or above in the tax year, as long as that payment wasn't made to a corporation. So you send 1099s to LLC's, sole proprietors, partnerships - just not Inc's.

More info at this other thread:
http://www.biggerpockets.com/forums/52/topics/56123-landlord-s-will-need-to-prepare-1-99s

Thanks Steve, it's $600, not a grand!



Mike Grayford

Rehabber from Simi Valley, California

Dec 20 '10, 04:25 AM
1 vote


Oops, sorry, Steve is correct about having to send the forms to LLCs and partnerships as well. Also, I think you have to send a 1099 to lawyers, even if they are corporations.



Bill Gulley

Real Estate Investor from Springfield, Missouri

Dec 20 '10, 04:48 AM


Everyone means everyone, we had this discussion before with Charles, our resident CPA (I like to call him) so, to your attorney, your CPA, to you butcher if you buy that much meat for your sales meetings and your auto mechanic if you get your company car fixed and deduct expenses. We were joking about sending AT&T a 1099, but lucky it's AT&T Inc.



Steve Babiak

Real Estate Investor from Audubon, Pennsylvania

Dec 20 '10, 05:37 AM


Bill,

For tax year 2011, AT&T Inc will be receiving 1099-MISC; the Inc exemption disappears in tax year 2011 reporting.

This is what makes this legislation that introduced this change so onerous.



Steve Babiak, Redeeming Properties, LLC
Telephone: 6109082183
...


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