4 Steps to 1099 - Deadline January 31, 2015

19 Replies

Time to file your 1099 forms but not to everyone you pay. So start cleaning up your books and excel file to identify whom you have to issue the form.

First you should have a w-9 form filled out by anyone whom you are going to pay over $600. You should have the w-9 form filled here is the link www.irs.gov/pub/irs-pdf/fw9.pdf

Second track all money paid out by name and dates

Here is a start on putting the puzzle pieces together before issuing the 1099 forms:

1 -- Send 1099 to anyone who is paid more than $600 for 2014

2 -- Do not send 1099 if the payee is incorporated. Identify the vendors by their business name. If it ends with inc then they should be incorporated.

3 -- Lawyers must be issued 1099

4 -- Financiers must be issued 1099 for interest paid on private loans over $10 (not mortgages or line of credit)

If you are using QuickBooks, you can easily identify which vendors need to be issued 1099s.

No company avatar mediumGita Faust, Fast Trac Consulting | [email protected] | 866‑645‑3356 | http://www.RealEstateAccounting.com

#2 is something I've never heard before. You don't 1099 your contractor if they're an LLC? Or do you mean incorporated as a C-corp?

Medium artboard 1 4xNghi Le, Radiant Team, LLC | [email protected]

To simplify, each and every person whom you will be paying $600 or more (in a single transaction or total over the course of the year) should be issued a W-9 to fill out AND a 1099 form.. Is that correct?

Thanks for the info!

As an aside if you have to file any time sensitive documents with the IRS get your accountant to do it on-line...ie: E-file per se.

in 2012 we filed 1098's by the usual registered mail & yet were fined over $700 for 'late' filing. We were advised to pay the 'fine', which we are still fighting, but are reminded occasionally by mail that it's 'an ongoing investigation'. 

I'm sure @Gita Faust is the most qualified person in this thread to clarify, but you owe a 1099 to the IRS and to anyone you pay over $600 in a calendar year who doesn't have "inc" at the end of their name.  You use the EIN for entities and their SSN for sole proprietors/individuals.

People flippantly use corporation for the "c" in LLC, but it is for company, not corporation. That's why it can be confusing.

No tax advice here, just discussing my experience. :-)

Originally posted by @Andrey Y. :

To simplify, each and every person whom you will be paying $600 or more (in a single transaction or total over the course of the year) should be issued a W-9 to fill out AND a 1099 form.. Is that correct?

 Anyone you pay totaling to $600 for the whole year.  Few of the reason why you should get the W-9 form are: ---- You make the vendor aware that they have to pay taxes on money received and ---- You get all the information on one piece of paper.

Let me know if we can help in any way.

No company avatar mediumGita Faust, Fast Trac Consulting | [email protected] | 866‑645‑3356 | http://www.RealEstateAccounting.com

Originally posted by @Pat L. :

As an aside if you have to file any time sensitive documents with the IRS get your accountant to do it on-line...ie: E-file per se.

in 2012 we filed 1098's by the usual registered mail & yet were fined over $700 for 'late' filing. We were advised to pay the 'fine', which we are still fighting, but are reminded occasionally by mail that it's 'an ongoing investigation'. 

 Interesting Pat. Should not be difficult to prove to the IRS. With technology, we get confirmation for all efilings. The deadline to efile is different. We efile with IRS and mail to all the vendors every year.

Hope you get it resolved quickly.

No company avatar mediumGita Faust, Fast Trac Consulting | [email protected] | 866‑645‑3356 | http://www.RealEstateAccounting.com

Originally posted by @Nghi Le :

#2 is something I've never heard before. You don't 1099 your contractor if they're an LLC? Or do you mean incorporated as a C-corp?

 You do send your contractor if they are anything other then S-Corp. And immaterial if they are working on rental or flip properties.

It does get confusing, but just make sure you cross your T's and dot your I's. before the new year rolls in.

No company avatar mediumGita Faust, Fast Trac Consulting | [email protected] | 866‑645‑3356 | http://www.RealEstateAccounting.com

What do you do if you did not have the W9 signed?

@Gita Faust  

just had a discussion with a contractor who believes that if the work was a capital improvement on a Principal Residence (that the home owner has signed off on) the home owner does not need to issue a 1099.

I disputed same as the Cap Exp. has too be fully documented to attach to the basis but it may come up with other BP'ers???

Originally posted by @Gita Faust :

4 -- Financiers must be issued 1099 for interest paid on private loans over $10 (not mortgages or line of credit)

Hi Gita,

If I am paying interest to a private lender, do I send them a 1099-MISC or a 1099-INT?

Thanks! Scott

It is my understanding that the 1099 is a form issued by a business to unincorporated entities that were paid at least $600 during the year for personal services.  A homeowner does not issue a 1099 for work done on a homeowner's primary residence.   If a homeowner had to issue a 1099 for any work done on the primary residence, then a lot of neighborhood kids that were paid for lawn mowing throughout the growing season would be getting 1099s.

It is my understanding that the 1099 is a form issued by a business to unincorporated entities that were paid at least $600 during the year for personal services.  A homeowner does not issue a 1099 for work done on a homeowner's primary residence.   If a homeowner had to issue a 1099 for any work done on the primary residence, then a lot of neighborhood kids that were paid for lawn mowing throughout the growing season would be getting 1099s for what is normally a non-deductible personal expense.

So I purchased my first flip in December in my own name and paid my general contractor (who has an LLC) two payments before the end of 2014 (and still one more payment to go this month). Do I need to issue him a 1099?

Medium artboard 1 4xNghi Le, Radiant Team, LLC | [email protected]

Originally posted by @Scott Williams :
Originally posted by @Gita Faust:

4 -- Financiers must be issued 1099 for interest paid on private loans over $10 (not mortgages or line of credit)

You have to issue an 1099-INT to them. 

Here is a detail article

Gita Faust

No company avatar mediumGita Faust, Fast Trac Consulting | [email protected] | 866‑645‑3356 | http://www.RealEstateAccounting.com

Originally posted by @Nghi Le :

So I purchased my first flip in December in my own name and paid my general contractor (who has an LLC) two payments before the end of 2014 (and still one more payment to go this month). Do I need to issue him a 1099?

 Nghi, Yes you need to issue the contractor a 1099 Misc form for any payment dated in 2014 immaterial if the checks were cashed.

Gita Faust

No company avatar mediumGita Faust, Fast Trac Consulting | [email protected] | 866‑645‑3356 | http://www.RealEstateAccounting.com