1099s for handyman work

Member since 2023 · 19 posts · 26 votes

Hi,

I'm searching for a Handyman, and when I sent a message to a handyman saying I'm a real estate investor looking for a handyman he replied "I don't do commercial work... i.e. no 1099s".

Can anyone explain more about this file? Do I need to give this file to anyone doing me a job? or should he give it to me?

0 Reply

37 views

9 Replies

Jump to latestLatest

Sort by

Joseph PalmieroBusiness Member
CPA · PA · Member since 2023 · 151 posts · 115 votes
3y
The IRS requires businesses to send a 1099 to individuals that are paid $600 or more for services performed. This is done in January for the previous year. You are also requied to send a copy to the IRS.
[email protected]814-720-2493
Palmiero CPA, LLC51 Review
Website View Page
0 Reply
Yoni Meth
OP
Member since 2023 · 19 posts · 26 votes
3y
Quote from @Joseph Palmiero:

The IRS requires businesses to send a 1099 to individuals that are paid $600 or more for services performed. This is done in January for the previous year. You are also requied to send a copy to the IRS.

What if I'm buying the property directly under my name, Is it considered to be a business?
What does it mean that he's not doing commercials?
0 Reply
Bill B.
Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
3y
He means he doesn’t want to pay any income tax on his income. Even a private person is supposed to send a 1099 for everyone they pay ove $600. This was a big scandal when politicians and celebrities were paying their Nannie’s and housekeepers in cash. I’m not sure but I believe you can be held responsible for the taxes owed if you don’t file one.
0 Reply
Michael PlaksPro Member
Tax Accountant / Enrolled Agent · Houston, TX · Member since 2014 · 5k+ posts · 6k+ votes
3y
@Yoni Meth
What it means is that he is cheating on his taxes. He is making money doing the work, but he is not reporting it and not paying taxes. Without 1099s, the IRS does not know.
For homeowners, his cheating is not their problem, because they are not required to send 1099s and cannot deduct payments to him anyway (unless they are cheating, too). Except that it tells you that this person is not an ethical professional, in case you care.
For investors like you, it is a problem, because you're supposed to send him a 1099, essentially turning him in and forcing him to pay taxes. Which he won't accept. So, if you want to hire him and pay him cash without reporting him, you will have to carry the risk that the IRS may give you hard time at some point.
Here is more: https://www.biggerpockets.com/forums/51/topics/1015043-deadl...
0 Reply
Michael PlaksPro Member
Tax Accountant / Enrolled Agent · Houston, TX · Member since 2014 · 5k+ posts · 6k+ votes
3y
Quote from @Account Closed:

By by Zelle or Venmo, then a 1099 isn't required. Zelle and Paypal will 1099 the receiver for you automatically.
This is incorrect.

You're required to issue 1099s for Zelle payments, because Zelle is not a "third-party settlement organization" and does not issue 1099s.

Venmo, PayPal and CashApp issue 1099s ONLY IF you pay using their "business" option, for which they charge recipients (your contractor, in this case) a fee, similar to credit card companies.

Since most investors pay using free "friends and family" option, it means two things:
1. They are violating the terms of service
2. They are still responsible for 1099s
0 Reply
Michael PlaksPro Member
Tax Accountant / Enrolled Agent · Houston, TX · Member since 2014 · 5k+ posts · 6k+ votes
3y
Quote from @Account Closed:

Maybe it's your CPA who needs to check his:
https://help.venmo.com/hc/en-us/articles/4407389460499-2023-Tax-FAQ
https://cash.app/help/US/EN-US/6499-Tax-reporting-1099kfaq
https://www.paypal.com/us/cshelp/article/will-paypal-report-my-sales-to-the-irs-help543

I'm not interested in continuing this debate. You can do whatever you and your CPA think is OK.
0 Reply

Join the conversationCreate a free account to reply, vote on answers and follow this thread.