Tax Question 1099 Form

4 Replies

I hired a contractor to install a new A/C unit for $4,000. Do you know if I must file a 1099 form to the contractor. I am not a real estate professional.

The real estate professional designation has nothing to do with 1099 reporting.  The key thing to ask is "am I running my property as a business, or as an investment?"  (It's a bit tricky to answer, isn't it?)

If this is an investment and you just have a few properties, then it's a grey area and many folks would advise that you don't need to issue 1099s.  If you've got multiple properties, do this full time, manage your own and generally run it like a business (ie, you take deductions for meals, mileage, phone, internet, etc.... beyond just "investment" expenses), then I'd argue that you're running it as a business and should 1099.

But really, when in doubt, 1099.  The issue you're running into now is that 1099s were suppose to be issued to vendors and reported to the IRS by 1/31/8.  So if you're issuing them now for 2017, you may incur penalties for late filing and also anger your vendors that you're just now getting them their paperwork and, for those who "forgot" to claim this income, they may now have to amend their returns.

Thank you for your response. I have just one property I am renting. 

@Jim Jamwant

Great answer from @Linda Weygant However, you can get fined for not filing 1099s and have you or your accountant explain to the IRS why you don’t need to supply one which will be frustrating and expensive.  It’s doesnt know if you are operating as a business or investment. They should but they don’t. 

I have my bookeeper file for every contractor vendor etc I pay over $600 unless they are a state registered corporation.  That means I file 1099s to individuals , LLCs, partnerships, sole proprietor etc.- it really isn’t that time consuming or expensive. 

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