If a neighborhood kid mows your lawn do you 1099 them? What's the impact of not sending the 1099? Do you lost the payments on your expenses?
Landlords issuing 1099s is a grey area.
There is no strict requirement for landlords to issue 1099s, and I have never heard of the IRS going after landlords for failure to file 1099s.
That being said it does not necessarily mean that 1099ing your contractors is a bad idea.
And remember the 1099 threshold for something like mowing lawns is $600 for the year per recipient.
The issue is whether one's real estate activities rise to the level of a trade or business, which they don't for the vast majority of BP landlords.
Now if real estate is your full-time thing and you're a real estate professional, you should consult with a CPA on this matter, but if you just have a handful of rentals that you manage on the side, no, you don't need to issue 1099s.
Thanks. Does not issuing one affect how much I can expense?
If I pay cash for something I don’t put it any where near my taxes (with very, very limited exceptions). If I would be claiming someone’s services I pay by check and get their social.
My expenses are backed up by receipts and done via credit card or check.
I don't know how much you are paying the kid to mow your lawn. Have you considered writing the kid a check and using that as a record of payment?
Create Lasting Wealth Through Real Estate
Join the millions of people achieving financial freedom through the power of real estate investing