Be a Pal! Send someone a 1099 to keep them honest

[Bruce D. Kowal]

If you paid anyone for services in 2021, more than $600, then you should send them a Form 1099-NEC.  It's not a favor, it's actually required by IRS.  If it's late, there is a penalty.  Less than $300.  You might get that penalty waived if you have reasonable cause.   But here's the thing, YOU may be on salary, and get a W2, or are getting 1099's form others.  YOU have to pay taxes, why should others skate?

Human nature is that we will avoid taxes, unless forced to recognize income.  

So, if you paid a Contractor last year to make repairs, chances are he is NOT reporting it.  Send him the Gift of Good Citizenship.  Send him Form 1099 and a copy to IRS.  Your CPA has the software to do this electronically.  Again, there are late filing penalties, especially after August, BUT you may get those penalties waived.  You start with asking him to fill out Form W-9. https://www.irs.gov/forms-pubs... 

If he refuses, then it gets interesting.  He/She is obviously trying to dodge taxes.  You tell him that if he refuses, you will send copy to IRS with notation that his tax id was not provided.  And you do that. It gets better, because IRS shares that information with the resident State.  So, both IRS and his State will be alerted.

Ask your CPA for help with this.

(Lawyers, too, get 1099's.)

Especially now, with the extended deadline of October 15 just weeks away.  That contractor will just love to refigure his taxes, and maybe end up paying more. 

(Heck, he may offer to pay you $, just to forget about sending that 1099!  You will resist that unethical temptation, though.  Won't you?)

Reach out and touch someone:  send them a 1099!  It's a small triumph for the honest taxpayer.  

[Chris Seveney]

@Bruce D. Kowal

It’s good SOP to not pay a vendor until you have their w9.

Also if you ever have a tenant stiff you $ that you cannot collect I know some people will send them a 1099 because they may not collect the money but Uncle Sam certainly well