Do you actually 1099 your private money lender?

Question

Private money lending is extremely common. Do you actually 1099 your private money lender, or just let it slide since it's friends/family and likely a lower than  market interest rate?

Steven Hamilton II · Answer

If your lender is a private non corporation you should be issuing them a 1099-INT for the interest received.

Steven Hamilton II · Answer

Correct, in many cases the borrower needs to issue the 1099-Int.

Gwen Fyfe · Answer

Having a regular job is also extremely common, but that's not a reason for your employer not to give you a W2. If your bank is giving you a cruddy interest rate and but you manage to get interest over the minimum reporting threshold, they're going to send you a 1099. How common it is or whether it's market rate doesn't make a difference.

If you are paying them interest you should be issuing a 1099-INT.

Your tax preparer can do this for you. There shouldn't be a very large charge, it takes us about ten minutes to do.

Julian Buick · Answer

@Steven Hamilton II

Are you saying the borrower should be issuing the lender a 1099INT if the lender is a private non corporation?

Steve Vaughan · Answer

Mine are serviced through a local bank's contract servicing dept, so they are 1098'd from the bank.  Banks and lenders are in the 1098 world, not 1099.

Other ones we both report the same amount of interest on our taxes.  I have a small one for instance and the interest runs about $1368/yr.  We just make sure we report the exact same amount - me as paying it and them as receiving it- when we file our separate taxes.

Do you actually 1099 your private money lender?

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